As filed with the Securities and Exchange Commission on September 27, 1996
Registration No. 33-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
INTEGRATED SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
California 94-2658153
(State of incorporation) (I.R.S. employer identification no.)
201 Moffett Park Drive
Sunnyvale, California 94089
(Address of principal executive offices)
Options granted under the Epilogue Technology Corporation
1994 Stock Option Plan
and assumed by Integrated Systems, Inc.
(Full title of the Plan)
Narendra K. Gupta
Integrated Systems, Inc.
201 Moffett Park Drive
Sunnyvale, California 94089
(408) 542-1500
(Name, address and telephone number of agent for service)
Copies to:
Mona Chandra, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Amount Proposed Maximum Proposed Maximum
Title of Securities to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Share Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 69,033(1) $7.50(2) $517,748 $178.00
- ------------------------------------------------------------------------------------------------------------------
<FN>
(1) Shares subject to options assumed as of July 29, 1996.
(2) Weighted average per share exercise price of outstanding options assumed
as of July 29, 1996.
</FN>
</TABLE>
<PAGE>
ITEM 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(a) The Registrant's latest annual report filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the latest prospectus filed
pursuant to Rule 424(b) under the Securities Act of 1933, as
amended (the "1933 Act"), that contains audited financial
statements for the Registrant's latest fiscal year for which
such statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by
the annual report or the prospectus referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in
the Registrant's registration statement filed with the
Commission under Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities registered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of the filing of such documents.
ITEM 4. Description of Securities.
Not Applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not applicable as to Interests of Named Experts and Counsel.
The consolidated balance sheets as of February 28, 1995 and 1996 and
the consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended February 28, 1996, and the
related financial statement schedule incorporated by reference in this
Registration Statement and appearing in Registrant's Annual Report on Form 10-K
filed April 12, 1996 (File Number 0-18268) have been incorporated herein in
reliance upon the report of Coopers & Lybrand L.L.P., independent accountants.
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<PAGE>
ITEM 6. Indemnification of Directors and Officers.
The provisions of Section 317 of the California Corporations Code,
Article VI of the Registrant's Articles of Incorporation and Article VI of the
Registrant's By-laws provide for indemnification for expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding arising by reason of the fact that any person is or was a
director or officer of the Registrant. The Registrant's directors and executive
officers have also entered into Indemnity Agreements with the Registrant that
give such directors and executive officers contractual assurances regarding the
scope of the indemnification and liability limitations set forth in the
Registrant's Articles of Incorporation and By-laws. The indemnification may be
sufficiently broad to permit indemnification of the Registrant's executive
officers and directors for liabilities arising under the 1933 Act. In addition,
Article V of the Registrant's Articles of Incorporation provides that the
liability of the Registrant's directors shall be eliminated to the fullest
extent permissible under California law.
The Registrant maintains a director and officer liability insurance
policy with a per annum policy limit of $1,000,000, all claims and coverages,
and a deductible of $100,000 per annum.
ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
The following exhibits are filed herewith:
4.01 Registrant's Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.01(i) to the
Registrants' Form 10-K for the year ended February 28, 1996).
4.02 Registrant's Bylaws, as amended to date.
4.03 Epilogue Technology Corporation 1994 Stock Option Plan, as
amended to date.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Coopers & Lybrand L.L.P.
24.01 Power of Attorney (see page 6).
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<PAGE>
ITEM 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions discussed in Item 6 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the
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<PAGE>
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereby, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual and corporation
whose signature appears below constitutes and appoints Narendra K. Gupta and
Steven Sipowicz, and each of them, his, her or its true and lawful
attorneys-in-fact and agents with full power of substitution, for him, her or it
and in his, her or its name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement on Form S-8, and to file the same with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he, she or it might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his, her, its or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on this 26th day of
September, 1996.
INTEGRATED SYSTEMS, INC.
By: /s/ Narendra K. Gupta
---------------------------------
Narendra K. Gupta, Secretary
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Principal Executive Officers:
/s/ Narendra K. Gupta Secretary and Chairman of the September 26, 1996
- ------------------------------------ Board of Directors
Narendra K. Gupta
/s/ David P. St. Charles President, Chief Executive September 26, 1996
- ------------------------------------ Officer and Director
David P. St. Charles
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<PAGE>
Principal Financial Officer and Principal Accounting Officer:
/s/ Steven Sipowicz Vice President, Finance September 26, 1996
- ------------------------------------
Steven Sipowicz
Additional Directors:
/s/ Thomas Kailath Director September 26, 1996
- ------------------------------------
Thomas Kailath
/s/ Vinita Gupta Director September 26, 1996
- ------------------------------------
Vinita Gupta
/s/ John C. Bolger Director September 26, 1996
- ------------------------------------
John C. Bolger
/s/ Richard C. Murphy Director September 26, 1996
- ------------------------------------
Richard C. Murphy
</TABLE>
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<PAGE>
Exhibit Index
Exhibit Description
- ------- -----------
4.01 Registrant's Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.01(i) to the
Registrant's Form 10-K for the year ended February 28, 1996).
4.02 Registrant's Bylaws, as amended to date.
4.03 Epilogue Technology Corporation 1994 Stock Option Plan, as
amended to date.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Coopers & Lybrand L.L.P.
24.01 Power of Attorney (see page 6).
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EXHIBIT 4.02
CERTIFICATION OF BYLAWS BY SECRETARY
KNOWN ALL BY THESE PRESENCE:
I, Narendra K. Gupta, certify that I am Secretary of Integrated
Systems, Inc., a California corporation (the "Company"), that I am duly
authorized to make this Certification, that the attached Bylaws are a true and
correct copy of the Bylaws duly adopted by the Board of Directors of the Company
and that the same are the Bylaws of the Company now in effect without amendment
thereto.
Dated: June 12, 1996
/s/ Narendra K. Gupta
-------------------------------
Narendra K. Gupta, Secretary
<PAGE>
BYLAWS
OF
INTEGRATED SYSTEMS, INC.
TABLE OF CONTENTS
PAGE
Article I OFFICES................................................ 1
Section 1.1: Principal Office.............................. 1
Section 1.2: Other Offices................................. 1
Article II DIRECTORS.............................................. 1
Section 2.1: Exercise of Corporate Powers.................. 1
Section 2.2: Number........................................ 1
Section 2.3: Need Not Be Shareholders...................... 2
Section 2.4: Compensation.................................. 2
Section 2.5: Election and Term of Office................... 2
Section 2.6: Vacancies..................................... 2
Section 2.7: Removal....................................... 3
Section 2.8: Powers and Duties............................. 3
Article III MEETINGS OF DIRECTORS.................................. 5
Section 3.1: Place of Meetings............................. 5
Section 3.2: Regular Meetings.............................. 6
Section 3-3: Special Meetings.............................. 6
Section 3.4: Notice of Special Meetings.................... 6
Section 3.5: Quorum........................................ 6
Section 3.6: Conference Telephone.......................... 7
Section 3.7: Waiver of Notice and Consent.................. 7
Section 3.8: Action Without A Meeting...................... 7
Section 3.9: Committees.................................... 7
<PAGE>
PAGE
Article IV COMMITTEES................................................ 7
Section 4.1: Appointment and Procedure..................... 7
Section 4.2: Executive Committee Powers.................... 8
Section 4.3: Powers of Other Committees.................... 8
Section 4.4: Limitation on Powers of Committees............ 8
Article V OFFICERS.................................................. 8
Section 5.1: Election and Qualifications................... 8
Section 5.2: Term of Office and Compensation............... 9
Section 5.3: Chairman of the Board......................... 9
Section 5.4: President..................................... 9
Section 5.5: President Pro Tem............................. 10
Section 5.6: Vice President................................ 10
Section 5.7: Secretary..................................... 10
Section 5.8: Chief Financial Officer....................... 11
Section 5.9: Instruments in Writing........................ 12
Article VI INDEMNIFICATION OF AGENTS................................ 12
Section 6.1: Indemnification of Directors,
Officers and Employees........................ 12
Section 6.2: Advancement of Expenses....................... 13
Section 6.3: Non-Exclusivity of Rights..................... 13
Section 6.4: Indemnification Contracts..................... 13
Section 6.5: Effect of Amendment........................... 13
Article VII MEETINGS OF SHAREHOLDERS................................ 14
Section 7.1: Place of Meetings............................. 14
Section 7.2: Annual Meetings............................... 14
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<PAGE>
PAGE
Section 7.3: Special Meetings.............................. 14
Section 7.4: Notice of Meetings............................ 14
Section 7.5: Consent to Shareholders....................... 15
Section 7.6: Quorum........................................ 16
Section 7.7: Adjourned Meetings............................ 16
Section 7.8: Voting Rights................................. 17
Section 7.9: Action by Written Consents.................... 17
Section 7.10: Election of Directors......................... 18
Section 7.11: Proxies....................................... 18
Section 7.12: Inspectors of Election........................ 19
Article VIII SUNDRY PROVISIONS...................................... 19
Section 8.1: Shares Held By the Company.................... 19
Section 8.2: Certificates for Shares....................... 20
Section 8.3: Lost Certificates............................. 20
Section 8.4: Certification and
Inspection of Bylaws.......................... 20
Section 8.5: Annual Reports................................ 20
Article IX CONSTRUCTION OF BYLAWS WITH
REFERENCE TO PROVISIONS OF LAW......................... 20
Section 9.1: Bylaw Provisions Construed as
Additional and Supplemental to
Provisions of Law............................. 20
Section 9.2: Bylaws Provisions Contrary to or
Inconsistent with Provisions of Law........... 21
Article X ADOPTION, AMENDMENT OR REPEAL
OF BYLAWS.............................................. 21
Section 10.1: By Shareholders............................... 21
Section 10.2: By the Board of Directors..................... 21
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<PAGE>
PAGE
Article XI RESTRICTIONS ON TRANSFER OF STOCK...................... 21
Section 11.1: Transfer of Shares............................ 21
Section 11.2: Subsequent Agreement or Bylaw................. 21
- iv -
<PAGE>
BYLAWS
OF
INTEGRATED SYSTEMS, INC.
(a California corporation)
As Amended through June 12, 1996
Article I
OFFICES
Section 1.1: Principal Office. The principal executive office for the
transaction of the business of this corporation (the "Company") shall be located
at such place as the Board of Directors may from time to time decide. The Board
of Directors is hereby granted full power and authority to change the location
of the principal executive office from one location to another.
Section 1.2: Other Offices. One or more branch or other subordinate
offices may at any time be fixed and located by the Board of Directors at such
place or places within or outside the State of California as it deems
appropriate.
Article II
DIRECTORS
Section 2.1: Exercise of Corporate Powers. Except as otherwise provided
by these Bylaws, by the Articles of Incorporation of the Company or by the laws
of the State of California now or hereafter in force, the business and affairs
of the Company shall be managed and all corporate powers shall be exercised by
or under the ultimate direction of a board of directors (the "Board of
Directors").
Section 2.2: Number. The number of directors of this Company shall not
be less than four (4) nor more than seven (7) with the exact number of directors
to be fixed from time to time by resolution of the Board of Directors of this
Company. There shall be six (6) directors until such number is changed by
resolution of the Board of Directors. The number of directors of this Company
shall be so variable until changed by an amendment of this Article II, Section
2.2 adopted by the affirmative vote or written consent of holders of a majority
of the outstanding shares of the Company entitled to vote. No amendment may
change the stated maximum number of authorized directors to a number greater
than two (2) times the stated minimum number of directors minus one (1).
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<PAGE>
Section 2.3: Need Not Be Shareholders. The directors of the Company
need not be shareholders of this Company.
Section 2.4: Compensation. Directors and members of committees may
receive such compensation, if any, for their services as may be fixed or
determined by resolution of the Board of Directors. Nothing herein contained
shall be construed to preclude any director from serving the Company in any
other capacity and receiving compensation therefor.
Section 2.5: Election and Term of Office. The directors shall be
elected annually by the shareholders at the annual meeting of the shareholders.
The term of office of the directors shall begin immediately after their election
and shall continue until the next annual meeting of the shareholders and until
their respective successors are elected and qualified.
Section 2.6: Vacancies. A vacancy or vacancies on the Board of
Directors shall exist in case of the death, resignation or removal of any
director, or if the authorized number of directors is increased, or if the
shareholders fail, at any annual meeting of shareholders at which any director
is elected, to elect the full authorized number of directors at that meeting.
The Board of Directors may declare vacant the office of a director if he or she
is declared of unsound mind by an order of court or convicted of a felony or if,
within 60 days after notice of his election, he or she does not accept the
office. Any vacancy, except for a vacancy created by removal of a director as
provided in Section 2.7 hereof, may be filled by a person selected by a majority
of the remaining directors then in office, whether or not less than a quorum, or
by a sole remaining director. Vacancies occurring in the Board of Directors by
reason of removal of directors shall be filled only by approval of shareholders.
The shareholders may elect a director at any time to fill any vacancy not filled
by the directors. Any such election by written consent, other than to fill a
vacancy created by removal, requires the consent of a majority of the
outstanding shares entitled to vote. If, after the filling of any vacancy by the
directors, the directors then in office who have been elected by the
shareholders shall constitute less than a majority of the directors then in
office, any holder or holders of an aggregate of 5% or more of the total number
of shares at the time outstanding having the right to vote for such directors
may call a special meeting of shareholders to be held to elect the entire Board
of Directors. The term of office of any director then in office shall terminate
upon such election and qualification of a successor. Any director may resign
effective upon giving written notice to the Chairman of the Board, if any, the
President, the Secretary or the Board of Directors, unless the notice specifies
a later time for the effectiveness of such resignation. If the resignation is
effective at a future time, a successor may be elected to take office when the
resignation becomes effective. A reduction of the authorized number of directors
shall not remove any director prior to the expiration of such director's term of
office.
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Section 2.7: Removal. The entire Board of Directors or any individual
director may be removed from office without cause by an affirmative vote of a
majority of the outstanding shares entitled to vote; provided that, unless the
entire Board of Directors is removed, no director shall be removed when the
votes cast against removal, or not consenting in writing to such removal, would
be sufficient to elect such director if voted cumulatively at an election at
which the same total number of votes were cast, or, if such action is taken by
written consent, all shares entitled to vote were voted, and the entire number
of directors authorized at the time of the director's most recent election were
then being elected. if any or all directors are so removed, new directors may be
elected at the same meeting or at a subsequent meeting. If at any time a class
or series of shares is entitled to elect one or more directors under authority
granted by the Articles of Incorporation, the provisions of this Section 2.7
shall apply to the vote of that class or series and not to the vote of the
outstanding shares as a whole.
Section 2.8: Powers and Duties. Without limiting the generality or
extent of the general corporate powers to be exercised by the Board of Directors
pursuant to Section 2.1 of these Bylaws, it is hereby provided that the Board of
Directors shall have full power with respect to the following matters:
(a) To purchase, lease and acquire any and all kinds of
property, real, personal or mixed, and at its discretion to pay therefor in
money, in property and/or in stocks, bonds, debentures or other securities of
the Company.
(b) To enter into any and all contracts and agreements which
in its judgment may be beneficial to the interests and purposes of the Company.
(c) To fix and determine and to vary from time to time the
amount or amounts to be set aside or retained as reserve funds or as working
capital of the Company or for maintenance, repairs, replacements or enlargements
of its properties.
(d) To declare and pay dividends in cash, shares and/or
property out of any funds of the Company at the time legally available for the
declaration and payment of dividends on its shares.
(e) To adopt such rules and regulations for the conduct of its
meetings and the management of the affairs of the Company as it may deem proper.
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<PAGE>
(f) To prescribe the manner in which and the person or persons
by whom any or all of the checks, drafts, notes, bills of exchange, contracts
and other corporate instruments shall be executed.
(g) To accept resignations of directors; to declare vacant the
office of a director as provided in Section 2.6 hereof; and, in case of vacancy
in the office of directors, to fill the same to the extent provided in Section
2.6 hereof.
(h) To create offices in addition to those for which provision
is made by law or these Bylaws; to elect and remove at pleasure all officers of
the Company, fix their terms of office, prescribe their titles, powers and
duties, limit their authority and fix their salaries in any way it may deem
advisable that is not contrary to law or these Bylaws.
(i) To designate one or more persons to perform the duties and
exercise the powers of any officer of the Company during the temporary absence
or disability of such officer.
(j) To appoint or employ and to remove at pleasure such agents
and employees as it may see fit, to prescribe their titles, powers and duties,
limit their authority and fix their salaries in any way it may deem advisable
that is not contrary to law or these Bylaws.
(k) To fix a time in the future, which shall not be more than
60 days nor less than 10 days prior to the date of the meeting nor more than 60
days prior to any other action for which it is fixed, as a record date for the
determination of the shareholders entitled to notice of and to vote at any
meeting, or entitled to receive any payment of any dividend or other
distribution, or allotment of any rights, or entitled to exercise any rights in
respect of any other lawful action; and in such case only shareholders of record
on the date so fixed shall be entitled to notice of and to vote at the meeting
or to receive the dividend, distribution or allotment of rights or to exercise
the rights, as the case may be, notwithstanding any transfer of any shares on
the books of the Company after any record date fixed as aforesaid. The Board of
Directors may close the books of the Company against transfers of shares during
the whole or any part of such period.
(l) To fix and locate from time to time the principal office
for the transaction of the business of the Company and one or more branch or
other subordinate offices of the Company within or without the State of
California; to designate any place within or without the State of California for
the holding of any meeting or meetings of the shareholders or the Board of
Directors, as provided in Sections 3.1 and 7.1 hereof; to adopt, make and use a
corporate seal, and to prescribe the forms of certificates for shares and to
alter the form of such seal and of such certificates from time to time as in its
judgment it may deem best, provided such seal and such certificates shall at all
times comply with the provisions of law now or hereafter in effect.
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<PAGE>
(m) To authorize the issuance of shares of stock of the
Company in accordance with the laws of the State of California and the Articles
of Incorporation.
(n) Subject to the limitation provided in Section 10.2 hereof,
to adopt, amend or repeal from time to time and at any time these Bylaws and any
and all amendments thereof.
(o) To borrow money and incur indebtedness on behalf of the
Company, including the power and authority to borrow money from any of the
shareholders, directors or officers of the Company; and to cause to be executed
and delivered therefor in the corporate name promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations, or other
evidences of debt and securities therefor; and the note or other obligation
given for any indebtedness of the Company, signed officially by any officer or
officers thereunto duly authorized by the Board of Directors, shall be binding
on the Company.
(p) To approve a loan of money or property to any officer or
director of the Company or any parent or subsidiary company, guarantee the
obligation of any such officer or director, or approve an employee benefit plan
authorizing such a loan or guaranty to any such officer or director; provided
that, on the date of approval of such loan or guaranty, the Company has
outstanding shares held of record by 100 or more persons. Such approval shall
require a determination by the Board of Directors that the loan or guaranty may
reasonably be expected to benefit the Company and must be by vote sufficient
without counting the vote of any interested director.
(q) Generally to do and perform every act and thing whatsoever
that may pertain to the office of a director or to a board of directors.
Article III
MEETINGS OF DIRECTORS
Section 3 1: Place of Meetings. Meetings (whether regular, special or
adjourned) of the Board of Directors of the Company shall be held at the
principal executive office of the Company or at any other place within or
outside the State of California which may be designated from time to time by
resolution of the Board of Directors or which is designated in the notice of the
meeting.
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Section 3.2: Regular Meetings. Regular meetings of the Board of
Directors shall be held after the adjournment of each annual meeting of the
shareholders (which regular directors' meeting shall be designated the "Regular
Annual Meeting") and at such other times as may be designated from time to time
by resolution of the Board of Directors. Notice of the time and place of all
regular meetings shall be given in the same manner as for special meetings,
except that no such notice need be given if (a) the time and place of such
meetings are fixed by the Board of Directors or (b) the Regular Annual Meeting
is held at the principal executive office of this Corporation and on the date
specified by the Board of Directors.
Section 3.3: Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board, if any, or the
President, or any Vice President, or the Secretary or by any two or more
directors.
Section 3.4: Notice of Special Meetings. Special meetings of the Board
of Directors shall be held upon no less than 4 days' notice by mail or 48 hours'
notice delivered personally or by telephone or telegraph to each director.
Notice need not be given to any director who signs a waiver of notice or a
consent to holding the meeting or an approval of the minutes thereof, whether
before or after the meeting, or who attends the meeting without protesting,
prior thereto or at its commencement, the lack of notice to such director. All
such waivers, consents and approvals shall be filed with the corporate records
or made a part of the minutes of the meeting. Any oral notice given personally
or by telephone may be communicated either to the director or to a person at the
home or office of the director who the person giving the notice has reason to
believe will promptly communicate it to the director. A notice or waiver of
notice need not specify the purpose of any meeting of the Board of Directors. If
the address of a director is not shown on the records of the Company and is not
readily ascertainable, notice shall be addressed to him at the city or place in
which meetings of the directors are regularly held. If a meeting is adjourned
for more than 24 hours, notice of any adjournment to another time or place shall
be given prior to the time of the adjourned meeting to all directors not present
at the time of adjournment.
Section 3.5: Quorum. A majority of the authorized number of directors
constitutes a quorum of the Board of Directors for the transaction of business.
Every act or decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present is the act of the Board of
Directors subject to provisions of law relating to interested directors and
indemnification of agents of the Company. A majority of the directors present,
whether or not a quorum is present, may adjourn any meeting to another time and
place. A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for such meeting.
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Section 3.6: Conference Telephone. Members of the Board of Directors
may participate in a meeting through use of conference telephone or similar
communications equipment, so long as all directors participating in such meeting
can hear one another. Participation in a meeting pursuant to this Section
constitutes presence in person at such meeting.
Section 3.7: Waiver of Notice and Consent. The transactions of any
meeting of the Board of Directors, however called and noticed or wherever held,
shall be as valid as though had at a meeting duly held after regular call and
notice if a quorum is present, and if, either before or after the meeting, each
of the directors not present signs a written waiver of notice, a consent to
holding such meeting or an approval of the minutes thereof. All such waivers,
consents and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Section 3.8: Action Without a Meeting. Any action required or permitted
by law to be taken by the Board of Directors may be taken without a meeting, if
all members of the Board of Directors shall individually or collectively consent
in writing to such action. Such written consent or consents shall be filed with
the minutes of the proceedings of the Board of Directors. Such action by written
consent shall have the same force and effect as the unanimous vote of such
directors.
Section 3.9: Committees. The provisions of this Article apply also to
committees of the Board of Directors and action by such committees.
Article IV
COMMITTEES
Section 4.1: Appointment and Procedure. The Board of Directors may, by
resolution adopted by a majority of the authorized number of directors, appoint
from among its members one or more committees, including without limitation an
executive committee, an audit committee and a compensation committee, of two or
more directors. Each committee may make its own rules of procedure subject to
Section 3.9 hereof, and shall meet as provided by such rules or by a resolution
adopted by the Board of Directors (which resolution shall take precedence). A
majority of the members of the committee shall constitute a quorum, and in every
case the affirmative vote of a majority of all members of the committee shall be
necessary to the adoption of any resolution.
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Section 4.2: Executive Committee Powers. During the intervals between
the meetings of the Board of Directors, the Executive Committee, if any, in all
cases in which specific directions shall not have been given by the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Company in
such manner as the Executive Committee may deem best for the interests of the
Company.
Section 4.3: Powers of Other Committees. Other committees shall have
such powers as are given them in a resolution of the Board of Directors.
Section 4.4: Limitations on Powers of Committees. No committee shall
have the power to act with respect to:
(a) any action for which the laws of the State of California
also require shareholder approval or approval of the outstanding shares;
(b) the filling of vacancies on the Board of Directors or in
any committee;
(c) the fixing of compensation of the directors for serving on
the Board of Directors or on any committee;
(d) the amendment or repeal of these Bylaws or the adoption of
new Bylaws;
(e) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not amendable or repealable;
(f) a distribution to the shareholders of the Company, except
at a rate or in a periodic amount or within a price range as setforth in the
articles or determined by the Board of Directors; and
(g) the appointment of other committees of the Board of
Directors or the members thereof.
Article V
OFFICERS
Section 5.l: Election and Qualifications. The officers of the Company
shall consist of a President, a Secretary, a Chief Financial Officer and such
other officers, including, but not limited to, a Chairman of the Board of
Directors, Vice Chairman of the Board of Directors, one or more Vice Presidents,
a Treasurer, and Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, as the Board of Directors shall deem expedient, who shall be chosen
in such manner and hold their offices for such terms as the Board of Directors
may prescribe. Any number of offices may be held by the same person. Any Vice
President, Assistant Treasurer or Assistant Secretary, respectively, may
exercise any of the powers of the President, the Chief Financial Officer or the
Secretary, respectively, as directed by the Board of Directors, and shall
perform such other duties as are imposed upon him or her by these Bylaws or the
Board of Directors.
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Section 5.2: Term of Office and Compensation. The term of office
and salary of each of said officers and the manner and time of the payment of
such salaries shall be fixed and determined by the Board of Directors and may be
altered by said Board of Directors from time to time at its pleasure, subject to
the rights, if any, of any officer under any contract of employment. Any officer
may resign at any time upon written notice to the Company, without prejudice to
the rights, if any, of the Company under any contract to which the officer is a
party. If any vacancy occurs in any office of the Company, the Board of
Directors may appoint a successor to fill such vacancy.
Section 5.3: Chairman of the Board; Vice Chairman of the Board.
The Chairman of the Board of Directors, if there be one, shall have the power to
preside at all meetings of the Board of Directors and shall have such other
powers and shall be subject to such other duties as the Board of Directors may
from time to time prescribe. The Vice Chairman of the Board of Directors, if
there be one, shall have such powers and shall be subject to such other duties
as the Board of Directors may from time to time prescribe.
Section 5.4: President. The powers and duties of the President
are:
(a) To act as the general manager and, unless otherwise
designated by the Board of Directors, the chief executive officer of the Company
and, subject to the control of the Board of Directors, to have general
supervision, direction and control of the business and affairs of this company.
(b) To preside at all meetings of the shareholders and, in the
absence of the Chairman and Vice Chairman of the Board of Directors, at all
meetings of the Board of Directors.
(c) To call meetings of the shareholders and meetings of the
Board of Directors to be held at such times and, subject to the limitations
prescribed by law or by these Bylaws, at such places as he or she shall deem
proper.
(d) To affix the signature of the Company to all deeds,
conveyances, mortgages, leases, obligations, bonds, certificates and other
papers and instruments in writing which have been authorized by the Board of
Directors or which, in the judgment of the President, should be executed on
behalf of the Company; to sign certificates for shares of stock of the Company;
and, subject to the direction of the Board of Directors, to have general charge
of the property of the Company and to supervise and control all officers, agents
and employees of the Company.
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Section 5.5: President Pro Tem. If neither the Chairman or Vice
Chairman of the Board of Directors, the President, nor any Vice President is
present at any meeting of the Board of Directors, a President pro tem may be
chosen by the directors present at the meeting to preside and act at such
meeting. If neither the President nor any Vice President is present at any
meeting of the shareholders, a President pro tem may be chosen by the
shareholders present at the meeting to preside at such meeting.
Section 5.6: Vice President. The titles, powers and duties of the Vice
President or Vice Presidents, if any, shall be as prescribed by the Board of
Directors. In case of the resignation, disability or death of the President, the
Vice President, or one of the Vice Presidents, shall exercise all powers and
duties of the President. If there is more than one Vice President, the order in
which the Vice Presidents shall succeed to the powers and duties of the
President shall be as fixed by the Board of Directors.
Section 5.7: Secretary. The powers and duties of the Secretary are:
(a) To keep a book of minutes at the principal executive
office of the Company, or such other place as the Board of Directors may order,
of all meetings of its directors and shareholders with the time and place of
holding of such meeting, whether regular or special, and, if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders' meetings
and the proceedings thereof.
(b) To keep the seal of the Company and to affix the same to
all instruments which may require it.
(c) To keep or cause to be kept at the principal executive
office of the Company, or at the office of the transfer agent or agents, a
record of the shareholders of the Company, giving the names and addresses of all
shareholders and the number and class of shares held by each, the number and
date of certificates issued for shares and the number and date of cancellation
of every certificate surrendered for cancellation.
(d) To keep a supply of certificates for shares of the
Company, to fill in all certificates issued, and to make a proper record of each
such issuance; provided that, so long as the Company shall have one or more duly
appointed and acting transfer agents of the shares, or any class or series of
shares, of the Company, such duties with respect to such shares shall be
performed by such transfer agent or transfer agents.
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(e) To transfer upon the share books of the Company any and
all shares of the Company; provided that, so long as the Company shall have one
or more duly appointed and acting transfer agents of the shares, or any class or
series of shares, of the Company, such duties with respect to such shares shall
be performed by such transfer agent or transfer agents, and the method of
transfer of each certificate shall be subject to the reasonable regulations of
the transfer agent to whom the certificate is presented for transfer and, if the
Company then has one or more duly appointed and acting registrars, subject
to-the reasonable regulations of the registrar to which a new certificate is
presented for registration; and, provided further, that no certificate for
shares of stock shall be issued or delivered or, if issued or delivered, shall
have any validity whatsoever until and unless it has been signed or
authenticated in the manner provided in Section 8.2 hereof.
(f) To make service and publication of all notices that may be
necessary or proper in connection with meetings of the Board of Directors of the
shareholders of the Company. In case of the absence, disability, refusal or
neglect of the Secretary to make service or publication of any notices, then
such notices may be served and/or published by the President or a Vice
President, or by any person thereunto authorized by either of them, or by the
Board of Directors, or by the holders of a majority of the outstanding shares of
the Company.
(g) Generally to do and perform all such duties as pertain to
such office and as may be required by the Board of Directors.
Section 5.8: Chief Financial Officer. The powers and duties of the
Chief Financial Officer are:
(a) To supervise and control the keeping and maintaining of
adequate and correct accounts of the Company's properties and business
transactions, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, surplus and shares. The books of account
shall at all reasonable times be open to inspection by any director.
(b) To have the custody of all funds, securities, evidences of
indebtedness and other valuable documents of the Company and, at his or her
discretion, to cause any or all thereof to be deposited for the account of the
Company with such depository as may be designated from time to time by the Board
of Directors.
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(c) To receive or cause to be received, and to give or cause
to be given, receipts and acquittances for monies paid in for the account of the
Company.
(d) To disburse, or cause to be disbursed, all funds of the
Company as may be directed by the President or the Board of Directors, taking
proper vouchers for such disbursements.
(e) To render to the President or to the Board of Directors,
whenever either may require, accounts of all transactions as Chief Financial
Officer and of the financial condition of the Company.
(f) Generally to do and perform all such duties as pertain to
such office and as may be required by the Board of Directors.
Section 5.9: Instruments in Writing. All checks, drafts, demands for
money, notes and written contracts of the Company shall be signed by such
officer or officers, agent or agents, as the Board of Directors may from time to
time designate. No officer, agent, or employee of the Company shall have the
power to bind the Company by contract or otherwise unless authorized to do so by
these Bylaws or by the Board of Directors.
Article VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 6.1: Indemnification of Directors and Officers. The Company
shall indemnify each person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding") by reason of
the fact that such person is or was a director or officer of the Company, or is
or was serving at the request of the Company as a director or officer of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, or was a director or officer of a foreign or domestic corporation
which was a predecessor corporation of the Company or of another enterprise at
the request of such predecessor corporation, to the fullest extent permitted by
the California Corporations Code, against all expenses, including, without
limitation, attorneys' fees and any expenses of establishing a right to
indemnification, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such Proceeding, and such indemnification
shall continue as to a person who has ceased to be such a director or officer
and shall inure to the benefit of the heirs, executors and administrators of
such person; provided, however, that the Company shall indemnify any such person
seeking indemnity in connection with a Proceeding (or part thereof) initiated by
such person only if such Proceeding (or part thereof) was authorized by the
Board of Directors of the Company.
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Section 6.2: Advancement of Expenses. The Company shall pay all
expenses incurred by such a director or officer in defending any Proceeding as
they are incurred in advance of its final disposition; provided, however, that
the payment of such expenses incurred by a director or officer in advance of the
final disposition of a Proceeding shall be made only upon receipt by the Company
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall be determined ultimately that such person is not entitled to
be indemnified under this Article VI or otherwise; and provided further that the
Company shall not be required to advance any expenses to a person against whom
the Company directly brings an action, alleging that such person committed an
act or omission not in good faith or that involved intentional misconduct or a
knowing violation of law, or that was contrary to the best interest of the
Company, or derived an improper personal benefit from a transaction.
Section 6.3: Non-Exclusivity of Rights. The rights conferred on any
person in this Article VI shall not be deemed exclusive of any other rights that
such person may have or hereafter acquire under any statute, bylaw, agreement,
vote of shareholders or disinterested directors or otherwise, both as to action
in an official capacity and as to action in another capacity while holding such
office. Additionally, nothing in this Article VI shall limit the ability of the
Company, in its discretion, to indemnify or advance expenses to persons whom the
Company is not obligated to indemnify or advance expenses to pursuant to this
Article VI.
Section 6.4: Idemnification Contracts. The Board of Directors is
authorized to cause the Company to enter into a contract with any director,
officer, employee or agent of the Company, or any person serving at the request
of the Company as a director, officer, employee or agent of another corporation,
'partnership, joint venture, trust or other enterprise, providing for
indemnification rights, which rights may be greater than (to the extent
permitted by the Company's Articles of Incorporation and the California
Corporations Code), those provided for in this Article VI.
Section 6.5: Effect of Amendment. Any amendment, repeal or modification
of any provision of this Article VI shall be prospective only, and shall not
adversely affect any right or protection conferred on a person pursuant to this
Article VI and existing at the time of such amendment, repeal or modification.
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Article VII
MEETINGS OF SHAREHOLDERS
Section 7.1: Place of Meetings. Meetings (whether regular, special or
adjourned) of the shareholders of the Company shall be held at the principal
executive office for the transaction of business of the Company, or at any place
within or outside the State of California which may be designated by written
consent of all the shareholders entitled to vote thereat, or which may be
designated by resolution of the Board of Directors. Any meeting shall be valid
wherever held if held by the written consent of all the shareholders entitled to
vote thereat, given either before or after the meeting and filed with the
Secretary of the Company.
Section 7.2: Annual Meeting. The annual meetings of the shareholders
shall be held at the place provided pursuant to Section 7.1 hereof and at such
time in a particular year as may be designated by written consent of all the
shareholders entitled to vote thereat or which may be designated by resolution
of the Board of Directors of the Company. Said annual meetings shall be held for
the purpose of the election of directors, for the making of reports of the
affairs of the Company and for the transaction of such other business as may
properly come before the meeting.
Section 7.3: Special Meetings. Special meetings of the shareholders for
any purpose or purposes whatsoever may be called at any time by the President,
the Chairman of the Board of Directors or by the Board of Directors, or by two
or more members thereof, or by one or more holders of shares entitled to cast
not less than 10% of the votes at the meeting. Upon request in writing sent by
registered mail to the Chairman of the Board of Directors, President, Vice
President or Secretary, or delivered to any such officer in person, by any
person entitled to call a special meeting of shareholders, it shall be the duty
of such officer forthwith to cause notice to be given to the shareholders
entitled to vote that a meeting will be held at a time requested by the person
or persons calling the meeting, which (except where called by the Board of
Directors) shall be not less than 35 days nor more than 60 days after the
receipt of such request. If the notice is not given within 20 days after receipt
of the request, the person entitled to call the meeting may give the notice.
Notices of meetings called by the Board of Directors shall be given in
accordance with Section 7.4.
Section 7.4: Notice of Meetings. Notice of any meeting of shareholders
shall be given in writing not less than 10 (or, if sent by third-class mail, 30)
nor more than 60 days before the date of the meeting to each shareholder
entitled to vote thereat by the Secretary or an Assistant Secretary, or such
other person charged with that duty, or if there be no such officer or person,
or in case of his or her neglect or refusal, by any director or shareholder. The
notice shall state the place, date and hour of the meeting and (a) in the case
of a special meeting, the general nature of the business to be transacted, and
no other business may be transacted, or (b) in the case of the annual meeting,
those matters which the Board of Directors, at the time of the mailing of the
notice, intends to present for action by the shareholders, but any proper matter
may be presented at the meeting for such action, except that notice must be
given or waived in writing of any proposal relating to approval of contracts
between the Company and any director of the Company, amendment of the Articles
of Incorporation, reorganization of the Company or winding up of the affairs of
the Company. The notice of any meeting at which directors are to be elected
shall include the names of nominees intended at the time of the notice to be
presented by the Board of Directors for election. Notice of a shareholders'
meeting or any report shall be given to any shareholder, either (a) personally
or (b) by first-class mail, or, in case the Company has outstanding shares held
of record by 500 or more persons on the record date for the shareholders'
meeting, notice may be sent by third-class mail, or other means of written
communication, charges prepaid, addressed to
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such shareholder at such shareholder's address appearing on the books of the
Company or given by such shareholder to the Company for the purpose of notice.
If a shareholder gives no address or no such address appears on the books of the
Company, notice shall be deemed to have been given if sent by mail or other
means of written communication addressed to the place where the principal
executive office of the Company is located, or if published at least once in a
newspaper of general circulation in the county in which such office is located.
The notice or report shall be deemed to have been given at the time when
delivered personally or deposited in the United States mail, postage prepaid, or
sent by other means of written communication and addressed as hereinbefore
provided. An affidavit or declaration of delivery or mailing of any notice or
report in accordance with the provisions of this Section 7.4, executed by the
Secretary, Assistant Secretary or any transfer agent, shall be prima facie
evidence of the giving of the notice or report. If any notice or report
addressed to the shareholder at the address of such shareholder appearing on the
books of the Company is returned to the Company by the United States Postal
Service marked to indicate that the United States Postal Service is unable to
deliver the notice or report to the shareholder at such address, all future
notices or reports shall be deemed to have been duly given without further
mailing if the same shall be available for the shareholder upon written demand
of the shareholder at the principal executive office of the Company for a period
of one year from the date of the giving of the notice or report to all other
shareholders.
Section 7.5: Consent to Shareholders' Meetings. The transactions of any
meeting of shareholders, however called and noticed, and wherever held, are as
valid as though had at a meeting duly held after regular call and notice, if a
quorum is present, either in person or by proxy, and if, either before or after
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, signs a written waiver of notice or a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance of a person at a meeting shall constitute a
waiver of notice of and presence at such meeting, except when the person
objects, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters required by law to be included in the notice but not so
included, if such objection is expressly made at the meeting. Neither the
business to be transacted at nor the purpose of any regular or special meeting
of shareholders need be specified in any written waiver of notice, consent to
the holding of the meeting or approval of the minutes thereof, except as to
approval of contracts between the Company and any of its directors, amendment of
the Articles of Incorporation, reorganization of the Company or winding up the
affairs of the Company.
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Section 7.6: Quorum. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote at any meeting of the shareholders
shall constitute a quorum for the transaction of business. Shares shall not be
counted to make up a quorum for a meeting if voting of such shares at the
meeting has been enjoined or for any reason they cannot be lawfully voted at the
meeting. Shareholders present at a duly called or held meeting at which a quorum
is present may continue to transact business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum. Except as provided herein, the affirmative vote
of a majority of the shares represented and voting at a duly held meeting at
which a quorum is present (which shares voting affirmatively also constitute at
least a majority of the required quorum) shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required.
Section 7.7: Adjourned Meetings. Any shareholders' meeting, whether or
not a quorum is present, may be adjourned from time to time by the vote of a
majority of the shares, the holders of which are either present in person or
represented by proxy thereat, but, except as provided in Section 7.6 hereof, in
the absence of a quorum, no other business may be transacted at such meeting.
When a meeting is adjourned for more than 45 days or if after adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at a
meeting. Except as aforesaid, it shall not be necessary to give any notice of
the time and place of the adjourned meeting or of the business to be transacted
thereat other than by announcement at the meeting at which such adjournment is
taken. At any adjourned meeting the shareholders may transact any business which
might have been transacted at the original meeting.
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Section 7.8: Voting Rights. Only persons in whose names shares entitled
to vote stand on the stock records of the Company at the close of business on
the business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the business day next preceding the day
on which the meeting is held or, if some other day be fixed for the
determination of shareholders of record pursuant to Section 2.8(k) hereof, then
on such other day, shall be entitled to vote at such meeting. The record date
for determining shareholders entitled to give consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors has
been taken, shall be the day on which the first written consent is given. In the
absence of any contrary provision in the Articles of Incorporation or in any
applicable statute relating to the election of directors or to other particular
matters, each such person shall be entitled to one vote for each share.
Section 7.9: Action by Written Consents. Any action which may be taken
at any annual or special meeting of shareholders may be taken without a meeting
and without prior notice, if a consent in writing, setting forth the action so
taken, shall be signed by holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Unless the consents of all shareholders entitled to vote have been
solicited in writing, notice of any shareholder approval of (a) contracts
between the Company and any of its directors, (b) indemnification of any person,
(c) reorganization of the Company or (d) distributions to shareholders upon
winding up of the affairs of the Company without a meeting by less than
unanimous written consent shall be given at least 10 days before the
consummation of the action authorized by such approval, and prompt notice shall
be given of the taking of any other corporate action approved by shareholders
without a meeting by less than unanimous written consent to those shareholders
entitled to vote who have not consented in writing. All notices given hereunder
shall conform to the requirements of Section 7.4 hereto and applicable law. When
written consents are given with respect to any shares, they shall be given by
and accepted from the persons in whose names such shares stand on the books of
the Company at the time such respective consents are given or their proxies. Any
shareholder giving a written consent, or any shareholder's proxy holder, or a
transferee of the shares or a personal representative of the shareholder or
their respective proxy holders, may revoke the consent by a writing received by
the Company prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary of
the Company, but may not do so thereafter. Such revocation is effective upon its
receipt by the Secretary of the Company. Notwithstanding anything herein to the
contrary, and subject to Section 305 (b) of the California Corporations Code,
directors may not be elected by writ-ten consent except by unanimous written
consent of all shares entitled to vote for the election of directors.
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Section 7.10: Election of Directors. Every shareholder entitled to vote
at any election of directors of the Company may cumulate such shareholder's
votes and give one candidate a number of votes equal to the number of directors
to be elected multiplied by the number of votes to which the shareholder's
shares are normally entitled, or distribute the shareholder's votes on the same
principle among as many candidates as such shareholder thinks fit. No
shareholder, however, may cumulate such shareholder's votes for one or more
candidates unless such candidate's or candidates' names have been placed in
nomination prior to the voting and the shareholder has given notice at the
meeting, prior to voting, of such shareholder's intention to cumulate such
shareholder's votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The
candidates receiving the highest number of affirmative votes of the shares
entitled to be voted for them up to the number of directors to be elected by
such shares shall be declared elected. Votes against the director and votes
withheld shall have no legal effect. Election of directors need not be by ballot
except upon demand made by a shareholder at the meeting and before the voting
begins.
Section 7.11: Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or such person's duly
authorized agent and filed with the Secretary of the Company. No proxy shall be
valid (a) after revocation thereof, unless the proxy is specifically made
irrevocable and otherwise conforms to this Section and applicable law, or (b)
after the expiration of eleven months from the date thereof, unless the person
executing it specifies therein the length of time for which such proxy is to
continue in force. Revocation may be effected by a writing delivered to the
Secretary of the Company stating that the proxy is revoked or by a subsequent
proxy executed by the person executing the prior proxy and presented to the
meeting, or as to any meeting by attendance at the meeting and voting in person
by the person executing the proxy. A proxy is not revoked by the death or
incapacity of the maker unless, before the vote is counted, a written notice of
such death or incapacity is received by the Secretary of the Company. In
addition, a proxy may be revoked, notwithstanding a provision making it
irrevocable, by a transferee of shares without knowledge of the existence of the
provision unless the existence of the proxy and its irrevocability appears on
the certificate representing such shares.
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Section 7.12: Inspectors of Election. Before any meeting of
shareholders, the Board of Directors may appoint any persons other than nominees
for office to act as inspectors of election at the meeting or its adjournment.
If no inspectors of election are so appointed, the Chairman of the meeting may,
and on the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one or three. if inspectors are appointed at a meeting on the request of one or
more shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one or three inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, the Chairman of the meeting may, and upon the request
of any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy. These inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots, or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
Article VIII
SUNDRY PROVISIONS
Section 8.1: Shares Held by the Company. Shares in other company's
standing in the name of the Company may be voted or represented and all rights
incident thereto may be exercised on behalf of the Company by any officer of the
Company authorized to do so by resolution of the Board of Directors.
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<PAGE>
Section 8.2: Certificates for Shares. There shall be issued to every
holder of shares in the Company a certificate or certificates signed in the name
of the Company by the Chairman of the Board, if any, or the President or a Vice
President and by the Chief Financial Officer or an Assistant Chief Financial
Officer or the Secretary or any Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the Company
with the same effect as if such person were an officer, transfer agent or
registrar at the date of issue.
Section 8.3: Lost Certificates. Where the owner of any certificate for
shares of the Company claims that the certificate has been lost, stolen or
destroyed, a new certificate shall be issued in place of the original
certificate if the owner (a) so requests before the Company has notice that the
original certificate has been acquired by a bona fide purchaser and (b)
satisfies any reasonable requirements imposed by the Company, including without
limitation the filing with the Company of an indemnity bond or agreement in such
form and in such amount as shall be required by the President or a Vice
President of the Company. The Board of Directors may adopt such other provisions
and restrictions with reference to lost certificates, not inconsistent with
applicable law, as it shall in its discretion deem appropriate.
Section 8.4: Certification and Inspection of Bylaws. The Company shall
keep at its principal executive office the original or a copy of these Bylaws as
amended or otherwise altered to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours.
Section 8.5: Annual Reports. Provided that the Company has 100 or fewer
shareholders, the making of annual reports to the shareholders is dispensed with
and the requirement that such annual reports be made to shareholders is
expressly waived, except as may be directed from time to time by the Board of
Directors or the President.
Article IX
CONSTRUCTION OF BYLAWS WITH
REFERENCE TO PROVISIONS OF LAW
Section 9.1: Bylaw Provisions Construed as Additional and Supplemental
to Provisions of Law. All restrictions, limitations, requirements and other
provisions of these Bylaws shall be construed, insofar as possible, as
supplemental and additional to all provisions of law applicable to the subject
matter thereof and shall be fully complied with in addition to the said
provisions of law unless such compliance shall be illegal.
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<PAGE>
Section 9.2: Bylaws Provisions Contrary to or Inconsistent with
Provisions of Law. Any article, section, subsection, subdivision, sentence,
clause or phrase of these Bylaws which, upon being construed in the manner
provided in Section 9.1 hereof, shall be contrary to or inconsistent with any
applicable provision of law, shall not apply so long as said provisions of law
shall remain in effect, but such result shall not affect the validity or
applicability of any other portion of these Bylaws, it being hereby declared
that these Bylaws, and each article, section, subsection, subdivision, sentence,
clause or phrase thereof, would have been adopted irrespective of the fact that
any one or more articles, sections, subsections, subdivisions, sentences,
clauses or phrases is or are illegal.
Article X
ADOPTION, AMENDMENT OR REPEAL OF BYLAWS
Section 10.1: By Shareholders. Bylaws may be adopted, amended or
repealed by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote. Bylaws specifying or changing a fixed
number of directors or the maximum or minimum number or changing from a fixed to
a variable board or vice versa may be adopted only by the shareholders.
Section 10.2: By the Board of Directors. Subject to the right of
shareholders to adopt, amend or repeal Bylaws, and other than a Bylaw or
amendment thereof specifying or changing a fixed number of directors or the
maximum or minimum number or changing from a fixed to a variable board or vice
versa, these Bylaws may be adopted, amended or repealed by the Board of
Directors. A Bylaw adopted by the shareholders may restrict or eliminate the
power of the Board of Directors to adopt, amend or repeal Bylaws.
Article XI
RESTRICTIONS ON TRANSFER OF STOCK
Section 11.1: Transfer of Shares. Before any shareholders of the
Company may sell, assign, gift, pledge or otherwise transfer any shares of the
Company's capital stock, such shareholder shall first notify the Company in
writing of such transfer and such transfer may not be effected unless and until
legal counsel for the Company has concluded that such transfer, when effected as
proposed by such shareholder, will comply with all applicable provisions of any
applicable state and federal securities laws, including but not limited to the
Securities Act of 1933, as amended, and the California Corporate Securities Law
of 1968, as amended.
Section 11.2: Subsequent Agreement or Bylaw. If (a) any two or more
shareholders of the Company shall enter into any agreement abridging, limiting
or restricting the rights of any one or more of them to sell, assign, transfer,
mortgage, pledge, hypothecate or transfer on the books of the Company any or all
of the shares of the Company held by them, and if a copy of said agreement shall
be filed with the Company, or if (b) shareholders entitled to vote shall adopt
any Bylaw provision abridging, limiting or restricting the aforesaid rights of
any shareholders, then, and in either of such events, all certificates of shares
of stock subject to such abridgments, limitations or restrictions shall have a
reference thereto endorsed thereon by an officer of the Company and such
certificates shall not thereafter be transferred on the books of the Company
except in accordance with the terms and provisions of such as the case may be;
provided that, no restriction shall be binding with respect to shares issued
prior to adoption of the restriction unless the holders of such shares voted in
favor of or consented in writing to the restriction.
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EXHIBIT 4.03
EPILOGUE TECHNOLOGY CORPORATION,
a Delaware corporation
1994 STOCK OPTION PLAN
As Adopted October 6, 1994
1. PURPOSE. The purpose of the Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options. Capitalized terms
not defined in the text are defined in Section 20.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and
15, the total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be 30,000 Shares. Subject to Sections 2.2 and 15,
Shares shall again be available for grant and issuance in connection with future
Option grants under the Plan that: (a) are subject to issuance upon exercise of
an Option but cease to be subject to such Option for any reason other than
exercise of such Option, (b) are subject to an Option granted hereunder but are
forfeited or are repurchased by the Company at the original issue price, or (c)
are subject to an Option that otherwise terminates without Shares being issued.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under the Plan, and (b) the
Exercise Prices of and number of Shares subject to outstanding Options shall be
proportionately adjusted, subject to any required action by the Board or the
shareholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest Share, as determined by the Committee; and provided, further, that the
Exercise Price of any Option may not be decreased to below the par value of the
Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. NQSOs may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent, Subsidiary or Affiliate of the Company;
provided such consultants, contractors and advisors render bona fide services
not in connection with the offer and sale of securities in a capital-raising
transaction. A person may be granted more than one Option under the Plan.
<PAGE>
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be administered by the
Committee or the Board acting as the Committee. Subject to the general purposes,
terms and conditions of the Plan, and to the direction of the Board, the
Committee shall have full power to implement and carry out the Plan. The
Committee shall have the authority to:
(a) construe and interpret the Plan, any Option Agreement and any other
agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating to the
Plan;
(c) select persons to receive Options;
(d) determine the form and terms of Options;
(e) determine the number of Shares subject to Options;
(f) grant waivers of Plan or Option conditions;
(g) determine the vesting, exercisability and payment of Options;
(h) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Option or any Option Agreement; and
(i) make all other determinations necessary or advisable for the
administration of the Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Option shall be made in its sole discretion at the
time of grant of the Option or, unless in contravention of any express term of
the Plan or Option, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Option under
the Plan.
4.3 Exchange Act Requirements. If the Company is subject to
the Exchange Act, the Company will take appropriate steps to comply with the
disinterested director requirements of Section 16(b) of the Exchange Act,
including but not limited to, the appointment by the Board of a Committee
consisting of not less than two persons (who are members of the Board), each of
whom is a Disinterested Person.
5. OPTIONS. The Committee may grant Options to eligible persons and
shall determine whether such Options shall be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
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<PAGE>
5.1 Form of Option Grant. Each Option granted under the Plan
shall be evidenced by an Option Agreement which shall expressly identify the
Option as an ISO or NQSO ("Stock Option Agreement"), and be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee shall from time to time approve, and which shall comply with and be
subject to the terms and conditions of the Plan.
5.2 Date of Grant. The date of grant of an Option shall be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
the Plan will be delivered to the Participant within a reasonable time after the
granting of the Option.
5.3 Exercise Period. Options shall be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement; provided, however, that no Option shall be exercisable after
the expiration of ten (10) years from the date the Option is granted, and
provided further that no Option granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company ("Ten Percent Shareholder") shall be exercisable after the expiration of
five (5) years from the date the Option is granted. The Committee also may
provide for the exercise of Options to become exercisable at one time or from
time to time, periodically or otherwise, in such number or percentage as the
Committee determines.
5.4 Exercise Price. The Exercise Price shall be determined by
the Committee when the Option is granted and may be not less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO shall be not less than 100% of the Fair Market Value of
the Shares on the date of grant and (ii) the Exercise Price of any Option
granted to a Ten Percent Shareholder shall not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of the Plan.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to information
and other matters, if any, as may be required or desirable by the Company to
comply with applicable securities laws, together with payment in full of the
Exercise Price for the number of Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option shall always be
subject to the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then Participant may exercise such Participant's
Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than thirty (30)
days after the Termination Date, but in any event, no later than
the expiration date of the Options.
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<PAGE>
(b) If the Participant is terminated because of death or Disability (or
the Participant dies within 30 days of such termination), then
Participant's Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the
Termination Date and must be exercised by Participant (or
Participant's legal representative or authorized assignee) no later
than twelve (12) months after the Termination Date (or such shorter
time period as may be specified in the Stock Option Agreement), but
in any event no later than the expiration date of the Options.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
the Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year shall be ISOs and the Options for the amount
in excess of $100,000 that become exercisable in that calendar year shall be
NQSOs. In the event that the Code or the regulations promulgated thereunder are
amended after the Effective Date of the Plan to provide for a different limit on
the Fair Market Value of Shares permitted to be subject to ISOs, such different
limit shall be automatically incorporated herein and shall apply to any Options
granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of Participant, impair any of Participant's rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of the Plan for Options
granted on the date the action is taken to reduce the Exercise Price; provided,
further, that the Exercise Price shall not be reduced below the par value of the
Shares.
5.10 No Disqualification. Notwithstanding any other provision
in the Plan, no term of the Plan relating to ISOs shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
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<PAGE>
6. PAYMENT FOR SHARE PURCHASES.
6.1 Payment. Payment for Shares purchased pursuant to the Plan
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by waiver of compensation due or accrued to Participant for
services rendered;
(c) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from Participant and
a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer")
whereby the Participant irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to
pay for the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or
(2) through a "margin" commitment from Participant and an NASD
Dealer whereby Participant irrevocably elects to exercise
the Option and to pledge the Shares so purchased to the
NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price
directly to the Company;
or
(d) by any combination of the foregoing.
6.2 Withholding. Whenever Shares are to be issued in
satisfaction of Options granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under the Plan, payments
in satisfaction of Options are to be made in cash, such payment shall be net of
an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
7. PRIVILEGES OF STOCK OWNERSHIP.
7.1 Voting and Dividends. No Participant shall have any of the
rights of a shareholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
shall be a shareholder and have all the rights of a shareholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, however, that
the Participant shall have no right to retain such stock dividends or stock
distributions with respect to Shares that are repurchased at the Participant's
original Purchase Price pursuant to Section 9.
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<PAGE>
7.2 Financial Statements. The Company shall provide financial
statements to each Participant prior to such Participant's purchase of Shares
under the Plan, and to each Participant annually during the period such
Participant has Options outstanding; provided, however, the Company shall not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
8. TRANSFERABILITY. Options granted under the Plan, and any interest
therein, shall not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Option Agreement provisions relating thereto. During the lifetime of
the Participant an Option shall be exercisable only by the Participant, and any
elections with respect to an Option, may be made only by the Participant.
9. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Option Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under the Plan, for cash, at: (A) with respect to Shares that are
"Vested" (as defined in the Option Agreement), the higher of: (l) Participant's
original Purchase Price, or (2) the Fair Market Value of such Shares on
Participant's Termination Date, provided, such right of repurchase terminates
when the Company's securities become publicly traded; or (B) with respect to
Shares that are not "Vested" (as defined in the Option Agreement), at the
Participant's original Purchase Price, provided, that the right to repurchase at
the original Purchase Price lapses at the rate of at least 20% per year over 5
years from the date the Shares were purchased, and if the right to repurchase is
assignable, the assignee must pay the Company, upon assignment of the right to
repurchase, cash equal to the excess of the Fair Market Value of the Shares over
the original Purchase Price.
10. CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed.
11. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates.
12. EXCHANGE AND BUYOUT OF OPTIONS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Options in exchange for the surrender and
cancellation of any or all outstanding Options. The Committee may at any time
buy from a Participant an Option previously granted with payment in cash, Shares
or other consideration, based on such terms and conditions as the Committee and
the Participant shall agree.
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<PAGE>
13. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Option shall not
be effective unless such Option is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed, as they are in effect on the date of grant of the
Option and also on the date of exercise or other issuance. Notwithstanding any
other provision in the Plan, the Company shall have no obligation to issue or
deliver certificates for Shares under the Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) completion of any registration or other qualification
of such shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
shall have no liability for any inability or failure to do so.
14. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Option granted
under the Plan shall confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent, Subsidiary or Affiliate of the Company or limit in any
way the right of the Company or any Parent, Subsidiary or Affiliate of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
15. CORPORATE TRANSACTIONS.
15.1 Assumption or Replacement of Options by Successor. In the
event of (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company and the Options granted under the Plan are assumed or replaced by
the successor corporation, which assumption shall be binding on all
Participants), (b) a dissolution or liquidation of the Company, (c) the sale of
substantially all of the assets of the Company, or (d) any other transaction
which qualifies as a "corporate transaction" under Section 424(a) of the Code
wherein the shareholders of the Company give up all of their equity interest in
the Company (except for the acquisition, sale or transfer of all or
substantially all of the outstanding shares of the Company), any or all
outstanding Options may be assumed or replaced by the successor corporation (if
any), which assumption or replacement shall be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Options or
provide substantially similar consideration to Participants as was provided to
shareholders (after taking into account the existing provisions of the Options).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant.
In the event such successor corporation (if any) refuses to
assume or substitute Options, as provided above, pursuant to a transaction
described in this Subsection 15.1, such Options shall expire on such transaction
at such time and on such conditions as the Board shall determine.
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<PAGE>
15.2 Other Treatment of Options. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 15, in
the event of the occurrence of any transaction described in Section 15.1, any
outstanding Options shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
15.3 Assumption of Options by the Company. The Company, from
time to time, also may substitute or assume outstanding Options granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Option under the Plan in substitution of
such other company's Option, or (b) assuming such Option as if it had been
granted under the Plan if the terms of such assumed Option could be applied to
an Option granted under the Plan. Such substitution or assumption shall be
permissible if the holder of the substituted or assumed Option would have been
eligible to be granted an Option under the Plan if the other company had applied
the rules of the Plan to such grant. In the event the Company assumes an Option
granted by another company, the terms and conditions of such Option shall remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
16. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall become effective
on the date that it is adopted by the Board (the "Effective Date"). The Plan
shall be approved by the shareholders of the Company (excluding Shares issued
pursuant to this Plan), consistent with applicable laws, within twelve months
before or after the Effective Date. Upon the Effective Date, the Board may grant
Options pursuant to the Plan; provided, however, that: (a) no Option may be
exercised prior to initial shareholder approval of the Plan; (b) no Option
granted pursuant to an increase in the number of Shares approved by the Board
shall be exercised prior to the time such increase has been approved by the
shareholders of the Company; and (c) in the event that shareholder approval is
not obtained within the time period provided herein, all Options granted
hereunder shall be cancelled, any Shares issued pursuant to any Option shall be
cancelled and any purchase of Shares hereunder shall be rescinded. After the
Company becomes subject to Section 16(b) of the Exchange Act, the Company will
comply with the requirements of Rule 16b-3 (or its successor), as amended, with
respect to shareholder approval.
17. TERM OF PLAN. The Plan will terminate ten (10) years from the
Effective Date or, if earlier, the date of shareholder approval.
18. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Option Agreement or instrument to be executed pursuant
to the Plan; provided, however, that the Board shall not, without the approval
of the shareholders of the Company, amend the Plan in any manner that requires
such shareholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or pursuant to the Exchange Act
or Rule 16b-3 (or its successor), as amended, thereunder.
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<PAGE>
19. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan
by the Board, the submission of the Plan to the shareholders of the Company for
approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
20. DEFINITIONS. As used in the Plan, the following terms shall
have the following meanings:
"Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
"Option" means any Option under the Plan, including any
ISO or NQSO.
"Option Agreement" means, with respect to each Option,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Option.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the committee appointed by the Board
to administer the Plan, or if no committee is appointed, the Board.
"Company" means Epilogue Technology Corporation, a
corporation organized under the laws of the State of Delaware, or any successor
corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"Disinterested Person" means a director who has not,
during the period that person is a member of the Committee and for one year
prior to service as a member of the Committee, been granted an Option pursuant
to the Plan or any other plan of the Company or any Parent, Subsidiary or
Affiliate of the Company, except in accordance with the requirements set forth
in Rule 16b-3(c)(2)(i) (and any successor regulation thereto) as promulgated by
the SEC under Section 16(b) of the Exchange Act, as such rule is amended from
time to time and as interpreted by the SEC.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exercise Price" means the price at which a holder of
an Option may purchase the Shares issuable upon exercise of the Option.
- 9 -
<PAGE>
"Fair Market Value" means, as of any date, the value of
a share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its last reported sale price on the
Nasdaq National Market or, if no such reported sale
takes place on such date, the average of the closing
bid and asked prices;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, the last
reported sale price or, if no such reported sale takes
place on such date, the average of the closing bid and
asked prices on the principal national securities
exchange on which the Common Stock is listed or
admitted to trading;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on such
date, as reported by The Wall Street Journal, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of
Directors of the Company in good faith.
"Insider" means an officer or director of the Company
or any other person whose transactions in the Company's Common Stock are subject
to Section 16 of the Exchange Act.
"Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if at the time of
the granting of an Option under the Plan, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Option
under the Plan.
"Plan" means this Epilogue Technology Corporation 1994
Stock Option Plan, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of the Company's Common Stock,
$0.001 par value per share, reserved for issuance under the Plan, as adjusted
pursuant to Sections 2 and 15, and any successor security.
- 10 -
<PAGE>
"Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"Termination" or "Terminated" means, for purposes of
the Plan with respect to a Participant, that the Participant has ceased to
provide services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee shall have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "Termination
Date").
- 11 -
<PAGE>
EPILOGUE TECHNOLOGY CORPORATION,
a Delaware corporation
1994 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered
into as of the date of grant set forth below (the "Date of Grant") by and
between Epilogue Technology Corporation, a Delaware corporation (the "Company"),
and the participant named below ("Participant"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 1994 Stock
Option Plan (the "Plan").
Participant:
--------------------------------------------
- ------------------------
Social Security Number:
--------------------------------------------
- ------------------------
Address:
--------------------------------------------
- ------------------------
--------------------------------------------
- ------------------------
Total Option Shares:
--------------------------------------------
- ------------------------
Exercise Price Per Share:
--------------------------------------------
- ------------------------
Date of Grant:
--------------------------------------------
- ------------------------
First Vesting Date:
--------------------------------------------
- ------------------------
Expiration Date:
--------------------------------------------
- ------------------------
Type of Stock Option
(Check one): [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
-1-
<PAGE>
1. Grant of Option. The Company hereby grants to Participant an
option (the "Option") to purchase the total number of shares of Common Stock,
$0.001 par value per share, of the Company set forth above (the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Agreement and the Plan. If designated as an
Incentive Stock Option above, the Option is intended to qualify as an "incentive
stock option" ("ISO") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
<TABLE>
2. Exercise Period
2.1 Vesting Schedule. Provided Participant continues to
provide services to the Company or any Subsidiary, Parent or Affiliate of the
Company throughout the specified period, the Option shall become exercisable as
to portions of the Shares as follows:
<CAPTION>
Cumulative Number
of Shares
Exercisable:
-----------------
On or after: But before:
- ----------- ----------
<S> <C> <C>
, 19 , 19
- ---------------------- ------ ---------------------- ------- ----------------------
, 19 , 19
- ---------------------- ------ ---------------------- ------- ----------------------
, 19 , 19
- ---------------------- ------ ---------------------- ------- ----------------------
, 19 , 19
- ---------------------- ------ ---------------------- ------- ----------------------
, 19 , 19
- ---------------------- ------ ---------------------- ------- ----------------------
TOTAL OPTION SHARES: ----------------------
</TABLE>
2.2 Expiration. The Option shall expire on the
Expiration Date set forth above and must be exercised, if at all, on or before
the Expiration Date; provided, that the Option will become fully exercisable
within 5 years from the Date of Grant with at least 20% of the total shares
first becoming exercisable at the end of each of the five years.
3. Termination.
3.1 Termination for Any Reason Except Death or
Disability. If Participant is Terminated for any reason, except death or
Disability, the Option, to the extent (and only to the extent) that it would
have been exercisable by Participant on the date of Termination, may be
exercised by Participant no later than thirty (30) days after the date of
Termination, but in any event no later than the Expiration Date.
3.2 Termination Because of Death or Disability. If
Participant is Terminated because of death or Disability of Participant, the
Option, to the extent that it is exercisable by Participant on the date of
Termination, may be exercised by Participant (or Participant's legal
representative) no later than twelve (12) months after the date of Termination,
but in any event no later than the Expiration Date.
-2-
<PAGE>
3.3 No Obligation to Employ. Nothing in the Plan or
this Agreement shall confer on Participant any right to continue in the employ
of, or other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company, or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Participant's
employment or other relationship at any time, with or without cause.
4. Manner of Exercise.
4.1 Stock Option Exercise Agreement. To exercise this
Option, Participant (or in the case of exercise after Participant's death,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Company from time to time (the "Exercise Agreement"), which shall set forth,
inter alia, Participant's election to exercise the Option, the number of Shares
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities laws. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.
4.2 Limitations on Exercise. The Option may not be
exercised unless such exercise is in compliance with all applicable federal and
state securities laws, as they are in effect on the date of exercise. The Option
may not be exercised as to fewer than 100 Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be
accompanied by full payment of the Exercise Price for the Shares being purchased
in cash (by check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by waiver of compensation due or accrued to
Participant for services rendered;
(c) provided that a public market for the Company's stock
exists, (1) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of
the National Association of Securities Dealers (an
"NASD Dealer") whereby Participant irrevocably elects
to exercise the Option and to sell a portion of the
Shares so purchased to pay for the exercise price and
whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price
directly to the Company, or (2) through a "margin"
commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price
directly to the Company; or
(d) by any combination of the foregoing.
-3-
<PAGE>
4.4 Tax Withholding. Prior to the issuance of the
Shares upon exercise of the Option, Participant must pay or provide for any
applicable federal or state withholding obligations of the Company.
4.5 Issuance of Shares. Provided that the Exercise
Agreement and payment are in form and substance satisfactory to counsel for the
Company, the Company shall issue the Shares registered in the name of
Participant, Participant's authorized assignee, or Participant's legal
representative, and shall deliver certificates representing the Shares with the
appropriate legends affixed thereto.
5. Notice of Disqualifying Disposition of ISO Shares. If the
Option is an ISO, and if Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (1) the date two
years after the Date of Grant, and (2) the date one year after transfer of such
Shares to Participant upon exercise of the Option, Participant shall immediately
notify the Company in writing of such disposition. Participant agrees that
Participant may be subject to income tax withholding by the Company on the
compensation income recognized by Participant from the early disposition by
payment in cash or out of the current wages or other compensation payable to
Participant.
6. Compliance with Laws and Regulations. The exercise of the
Option and the issuance and transfer of Shares shall be subject to compliance by
the Company and Participant with all applicable requirements of federal and
state securities laws and with all applicable requirements of any stock exchange
on which the Company's Common Stock may be listed at the time of such issuance
or transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
7. Nontransferability of Option. The Option may not be
transferred in any manner other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant.
8. Tax Consequences. Set forth below is a brief summary as of
the Date of Grant of some of the federal and California tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
8.1 Exercise of ISO. If the Option qualifies as an ISO,
there will be no regular federal or California income tax liability upon the
exercise of the Option, although the excess, if any, of the fair market value of
the Shares on the date of exercise over the Exercise Price will be treated as a
tax preference item for federal income tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
8.2 Exercise of Nonqualified Stock Option. If the
Option does not qualify as an ISO, there may be a regular federal and California
income tax liability upon the exercise of the Option. Participant will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the fair market value of the Shares on
the date of exercise over the Exercise Price. The Company will be required to
withhold from Participant's compensation or collect from Participant and pay to
the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
-4-
<PAGE>
8.3 Disposition of Shares. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of the Option (and, in the case of an ISO, are disposed
of more than two years after the Date of Grant), any gain realized on
disposition of the Shares will be treated as long term capital gain for federal
and California income tax purposes. If Shares purchased under an ISO are
disposed of within one year of exercise or within two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the excess, if any,
of the Fair Market Value of the Shares on the date of exercise over the Exercise
Price. The Company will be required to withhold from Participant's compensation
or collect from Participant and pay to the applicable taxing authorities an
amount equal to a percentage of this compensation income at the time of
exercise.
9. Privileges of Stock Ownership. Participant shall not have any
of the rights of a shareholder with respect to any Shares until Participant
exercises the Option and pays the Exercise Price.
10. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.
11. Entire Agreement. The Plan is incorporated herein by
reference. This Agreement and the Plan constitute the entire agreement of the
parties and supersede all prior undertakings and agreements with respect to the
subject matter hereof.
12. Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified mail (return
receipt requested); one (1) business day after deposit with any return receipt
express courier (prepaid); or one (1) business day after transmission by rapifax
or telecopier.
13. Successors and Assigns. The Company may assign any of its
rights under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as such laws
are applied to agreements between California residents entered into and to be
performed entirely within California.
15. Acceptance. Participant hereby acknowledges receipt of a copy
of the Plan and this Agreement. Participant has read and understands the terms
and provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the Effective Date.
EPILOGUE TECHNOLOGY CORPORATION PARTICIPANT
By:
---------------------------- --------------------------------
(Signature)
- -------------------------------- ---------------------------------
(Please print name) (Please print name)
- --------------------------------
(Please print title)
-6-
<PAGE>
EXHIBIT A
EPILOGUE TECHNOLOGY CORPORATION,
a Delaware corporation
1994 STOCK OPTION PLAN
STOCK OPTION EXERCISE AGREEMENT
This Exercise Agreement is made and entered into as of
______________, 19___ (the "Effective Date") by and between Epilogue Technology
Corporation, a Delaware corporation (the "Company"), and the purchaser named
below (the "Purchaser"). Capitalized terms not defined herein shall have the
meaning ascribed to them in the Company's 1994 Stock Option Plan (the "Plan").
Purchaser:
---------------------------------------------
Social Security Number:
---------------------------------------------
Address:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Total Number of Shares:
---------------------------------------------
Purchase Price Per Share:
---------------------------------------------
Total Purchase Price:
---------------------------------------------
Option No. ___ Date of Grant:
---------------------------------------------
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
-1-
<PAGE>
1. Exercise of Option.
1.1 Exercise. Pursuant to exercise of that certain option
("Option") granted to Purchaser under the Plan and subject to the terms and
conditions of this Agreement, Purchaser hereby purchases from the Company, and
the Company hereby sells to Purchaser, the total number of shares set forth
above ("Shares") of the Company's Common Stock, $0.001 par value per Share, at a
purchase price per share set forth above for a total purchase price set forth
above (the "Purchase Price"). As used in this Agreement, the term "Shares"
refers to the Shares purchased under this Exercise Agreement and includes all
securities received (a) in replacement of the Shares, (b) as a result of stock
dividends or stock splits with respect to the Shares, and (c) all securities
received in replacement of the Shares in a merger, recapitalization,
reorganization or similar corporate transaction.
1.2 Title to Shares. The exact spelling of the name(s) under
which Purchaser will take title to the Shares is:
----------------------------------------------------------
----------------------------------------------------------
Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Alone or with spouse as trustee(s) of the
following trust (including date):
-------------------------------------------------
-------------------------------------------------
[ ] Other; please specify:
-------------------------------
-------------------------------------------------
1.3 Payment. Purchaser hereby delivers payment of the Purchase
Price in the manner permitted in the Stock Option Agreement as follows (check
and complete as appropriate):
[ ] in cash in the amount of $____________, receipt of which
is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to
Purchaser in the amount of $__________;
[ ] by the waiver hereby of compensation due or accrued for
services rendered in the amount of $_________.
-2-
<PAGE>
2. Delivery.
2.1 Deliveries by Purchaser. Purchaser hereby delivers to the
Company (i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power
and Assignment Separate from Stock Certificate in the form of Exhibit 1 attached
hereto (the "Stock Powers"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a Consent of Spouse in the form of
Exhibit 2 attached hereto (the "Spouse Consent") executed by Purchaser's spouse,
and (iv) the Purchase Price.
2.2 Deliveries by the Company. Upon its receipt of the Purchase
Price and all the documents to be executed and delivered by Purchaser to the
Company under Section 2.1, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser, to be placed in
escrow as provided in Section 11 until expiration or termination of the
Company's Repurchase Option and Right of First Refusal described in Sections 8
and 9 and payment in full to the Company of all sums due under the Note.
3. Representations and Warranties of Purchaser. Purchaser represents
and warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a copy
of the Plan and the Stock Option Agreement, has read and understands the terms
of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees
to be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.
3.2 Purchase for Own Account for Investment. Purchaser is
purchasing the Shares for Purchaser's own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). Purchaser has no present intention of selling or otherwise
disposing of all or any portion of the Shares and no one other than Purchaser
has any beneficial ownership of any of the Shares.
3.3 Access to Information. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.
3.4 Understanding of Risks. Purchaser is fully aware of: (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and the restrictions
on transferability of the Shares (e.g., that Purchaser may not be able to sell
or dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Shares. Purchaser is capable of evaluating the
merits and risks of this investment, has the ability to protect Purchaser's own
interests in this transaction and is financially capable of bearing a total loss
of this investment.
-3-
<PAGE>
3.5 No General Solicitation. At no time was Purchaser presented
with or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.
4. Compliance with Securities Laws.
4.1 Compliance with Federal Securities Laws. Purchaser
understands and acknowledges that the Shares have not been registered with the
Securities and Exchange Commission ("SEC") under the Securities Act and that,
notwithstanding any other provision of the Stock Option Agreement to the
contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act and all applicable state
securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws. The Shares are being issued under the Securities Act
pursuant to (the Company will check the applicable box):
[x] the exemption provided by SEC Rule 701;
[ ] the exemption provided by SEC Rule 504;
[ ] Section 4(2) of the Securities Act;
[ ] other: ____________________________.
4.2 Compliance with California Securities Laws. THE SALE OF THE
SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED
WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH
QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH
SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.
5. Restricted Securities.
5.1 No Transfer Unless Registered or Exempt. Purchaser
understands that Purchaser may not transfer any Shares unless such Shares are
registered under the Securities Act or qualified under applicable state
securities laws or unless, in the opinion of counsel to the Company, exemptions
from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.
5.2 SEC Rule 144. In addition, Purchaser has been advised that
SEC Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of two
years, and in certain cases three years, after they have been purchased and paid
for (within the meaning of Rule 144), before they may be resold under Rule 144.
Purchaser understands that Rule 144 may indefinitely restrict transfer of the
Shares so long as Purchaser remains an "affiliate" of the Company or if "current
public information" about the Company (as defined in Rule 144) is not publicly
available.
-4-
<PAGE>
5.3 SEC Rule 701. The Shares may become freely tradeable by
non-affiliates if issued pursuant to SEC Rule 701 promulgated under the
Securities Act (under limited conditions regarding the method of sale) 90 days
after the first sale of Common Stock of the Company to the general public
pursuant to a registration statement filed with and declared effective by the
SEC, subject to the lengthier market standoff agreement contained in Section 7
of this Exercise Agreement or any other agreement entered into by Purchaser.
Affiliates must comply with the provisions (other than the holding period
requirements) of Rule 144.
5.4 State Law Restrictions on Transfer. Purchaser understands
that transfer of the Shares may be restricted by Section 260.141.11 of the Rules
of the California Commissioner of Corporations, a copy of which is attached
hereto as Exhibit 3, and that the certificate(s) representing the Shares may
bear a legend to that effect.
6. Restrictions on Transfers.
6.1 Disposition of Shares. Purchaser hereby agrees that
Purchaser shall make no disposition of the Shares (other than as permitted by
this Agreement) unless and until:
(a) Purchaser shall have notified the Company of the
proposed disposition and provided a written summary of the terms and conditions
of the proposed disposition;
(b) Purchaser shall have complied with all requirements
of this Exercise Agreement applicable to the disposition of the Shares;
(c) Purchaser shall have provided the Company with
written assurances, in form and substance satisfactory to counsel for the
Company, that (i) the proposed disposition does not require registration of the
Shares under the Securities Act or (ii) all appropriate action necessary for
compliance with the registration requirements of the Securities Act or of any
exemption from registration available under the Securities Act (including Rule
144) has been taken; and
(d) Purchaser shall have provided the Company with
written assurances, in form and substance satisfactory to the Company, that the
proposed disposition will not result in the contravention of any transfer
restrictions applicable to the Shares pursuant to the provisions of the
Commissioner Rules identified in Section 4.2.
6.2 Restriction on Transfer. Purchaser shall not transfer,
assign, grant a lien or security interest in, pledge, hypothecate, encumber or
otherwise dispose of any of the Shares which are subject to the Company's
Repurchase Option or the Company's Right of First Refusal, except as permitted
by this Agreement.
6.3 Transferee Obligations. Each person (other than the Company)
to whom the Shares are transferred by means of one of the permitted transfers
specified in this Agreement must, as a condition precedent to the validity of
such transfer, acknowledge in writing to the Company that such person is bound
by the provisions of this Exercise Agreement and that the transferred shares are
subject to (i) both the Company's Repurchase Option and the Company's Right of
First Refusal granted hereunder and (ii) the market stand-off provisions of
Section 7, to the same extent such shares would be so subject if retained by the
Purchaser.
-5-
<PAGE>
7. Market Standoff Agreement. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) after the effective date of such
registration requested by such managing underwriters and subject to all
restrictions as the Company or the underwriters may specify.
8. Company's Repurchase Option. The Company, or its assignee, shall
have the option to repurchase all or a portion of the Shares on the terms and
conditions set forth in this Section (the "Repurchase Option") if Purchaser is
Terminated (as defined in the Plan) for any reason, or no reason, including
without limitation Purchaser's death, Disability (as defined in the Plan),
voluntary resignation or termination by the Company with or without cause.
8.1 Termination and Termination Date. In case of any dispute as
to whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "Termination Date").
8.2 Exercise of Repurchase Option. At any time within ninety
(90) days after the later of the Termination Date or the date the Purchaser
purchased the Shares, the Company, or its assignee, may elect to repurchase any
or all of the Shares by giving Purchaser written notice of exercise of the
Repurchase Option.
8.3 Calculation of Repurchase Price. The Company or its assignee
shall have the option to repurchase from Purchaser (or from Purchaser's personal
representative as the case may be) any or all of the Shares at the higher of
Fair Market Value of such Shares on the Purchaser's Termination Date or the
Purchaser's original Purchase Price Per Share.
8.4 Payment of Repurchase Price. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of Purchaser to
the Company or such assignee, or by any combination thereof. The repurchase
price shall be paid without interest within sixty (60) days after exercise of
the Repurchase Option.
8.5 Right of Termination Unaffected. Nothing in this Exercise
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent, Subsidiary or
Affiliate of the Company) to terminate Purchaser's employment or other
relationship with Company (or the Parent, Subsidiary or Affiliate of the
Company) at any time, for any reason or no reason, with or without cause.
8.6 Termination of Repurchase Option. The Repurchase Option
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the SEC (other than a registration statement solely
covering an employee benefit plan or corporate reorganization).
9. Company's Right of First Refusal. Before any Shares held by
Purchaser or any transferee of such Shares (either being sometimes referred to
herein as the "Holder") may be sold or otherwise transferred (including without
limitation a transfer by gift or operation of law), the Company and/or its
assignee(s) shall have an assignable right of first refusal to purchase the
Shares to be sold or transferred (the "Offered Shares") on the terms and
conditions set forth in this Section (the "Right of First Refusal").
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9.1 Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the
name of each proposed bona fide purchaser or other transferee ("Proposed
Transferee"); (iii) the number of Offered Shares to be transferred to each
Proposed Transferee; (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Offered Shares (the "Offered Price");
and (v) that the Holder will offer to sell the Offered Shares to the Company
and/or its assignee(s) at the Offered Price as provided in this Section.
9.2 Exercise of Right of First Refusal. At any time within
thirty (30) days after the date of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all
of the Offered Shares proposed to be transferred to any one or more of the
Proposed Transferees named in the Notice, at the purchase price determined as
specified below.
9.3 Purchase Price. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 Payment. Payment of the purchase price for Offered Shares
will be payable, at the option of the Company and/or its assignee(s) (as
applicable), by check or by cancellation of all or a portion of any outstanding
indebtedness of the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The
purchase price will be paid without interest within sixty (60) days after the
Company's receipt of the Notice, or, at the option of the Company and/or its
assignee(s), in the manner and at the time(s) set forth in the Notice.
9.5 Holder's Right to Transfer. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise transfer such Offered Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 120 days after the date of the
Notice, and provided further, that (i) any such sale or other transfer is
effected in compliance with all applicable securities laws and (ii) the Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to the Proposed
Transferee within such 120 day period, then a new Notice must be given to the
Company, and the Company will again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.
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<PAGE>
9.6 Exempt Transfers. Notwithstanding anything to the contrary
in this Section, the following transfers of Shares will be exempt from the Right
of First Refusal: (i) the transfer of any or all of the Shares during
Purchaser's lifetime by gift or on Purchaser's death by will or intestacy to
Purchaser's "immediate family" (as defined below) or to a trust for the benefit
of Purchaser or Purchaser's immediate family, provided that each transferee or
other recipient agrees in a writing satisfactory to the Company that the
provisions of this Section will continue to apply to the transferred Shares in
the hands of such transferee or other recipient; (ii) any transfer of Shares
made pursuant to a statutory merger or statutory consolidation of the Company
with or into another corporation or corporations (except that the Right of First
Refusal will continue to apply thereafter to such Shares, in which case the
surviving corporation of such merger or consolidation shall succeed to the
rights of the Company under this Section unless the agreement of merger or
consolidation expressly otherwise provides); or (iii) any transfer of Shares
pursuant to the winding up and dissolution of the Company. As used herein, the
term "immediate family" will mean Purchaser's spouse, the lineal descendant or
antecedent, father, mother, brother or sister, adopted child or grandchild of
the Purchaser or the Purchaser's spouse, or the spouse of any child, adopted
child, grandchild or adopted grandchild of Purchaser or the Purchaser's spouse.
9.7 Termination of Right of First Refusal. The Right of First
Refusal will terminate as to all Shares on the effective date of the first sale
of Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the SEC under the Securities Act
(other than a registration statement relating solely to the issuance of Common
Stock pursuant to a business combination or an employee incentive or benefit
plan).
10. Rights as Shareholder. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Shares from and after the date that Purchaser
delivers payment of the Purchase Price until such time as Purchaser disposes of
the Shares or the Company and/or its assignee(s) exercise(s) the Repurchase
Option or Right of First Refusal. Upon an exercise of the Repurchase Option or
the Right of First Refusal, Purchaser will have no further rights as a holder of
the Shares so purchased upon such exercise, except the right to receive payment
for the Shares so purchased in accordance with the provisions of this Exercise
Agreement, and Purchaser will promptly surrender the stock certificate(s)
evidencing the Shares so purchased to the Company for transfer or cancellation.
11. Escrow. As security for Purchaser's faithful performance of this
Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company ("Escrow Holder"), who is hereby appointed to
hold such certificate(s) and Stock Powers in escrow and to take all such actions
and to effectuate all such transfers and/or releases of such Shares as are in
accordance with the terms of this Agreement. Purchaser and the Company agree
that Escrow Holder will not be liable to any party to this Exercise Agreement
(or to any other party) for any actions or omissions unless Escrow Holder is
grossly negligent or intentionally fraudulent in carrying out the duties of
Escrow Holder under this Exercise Agreement. Escrow Holder may rely upon any
letter, notice or other document executed by any signature purported to be
genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Agreement. The Shares will
be released from escrow upon termination of both the Repurchase Option and the
Right of First Refusal.
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<PAGE>
12. Restrictive Legends and Stop-Transfer Orders.
12.1 Legends. Purchaser understands and agrees that the Company
will place the legends set forth below or similar legends on any stock
certificate(s) evidencing the Shares, together with any other legends that may
be required by state or federal securities laws, the Company's Certificate of
Incorporation or Bylaws, any other agreement between Purchaser and the Company
or any agreement between Purchaser and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON PUBLIC RESALE, TRANSFER, RIGHT OF
REPURCHASE AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER
AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION EXERCISE
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS AND
THE RIGHT OF REPURCHASE AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THESE SHARES.
The California Commissioner of Corporations may require that the
following legend also be placed upon the share certificate(s) evidencing
ownership of the Shares:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.
12.2 Stop-Transfer Instructions. Purchaser agrees that, to
ensure compliance with the restrictions imposed by this Agreement, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
-9-
<PAGE>
12.3 Refusal to Transfer. The Company will not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares, or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares have been so transferred.
13. Tax Consequences. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION
OF THE SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE. IN PARTICULAR, IF THE SHARES ARE SUBJECT TO REPURCHASE BY THE COMPANY OR
IF PURCHASER IS AN INSIDER SUBJECT TO SECTION 16(b) OF THE EXCHANGE ACT,
PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH PURCHASER'S TAX ADVISER
CONCERNING THE ADVISABILITY OF FILING AN 83(b) ELECTION WITH THE INTERNAL
REVENUE SERVICE. Set forth below is a brief summary as of the date of this
Exercise Agreement of some of the federal and California tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXECUTING THIS OPTION OR
DISPOSING OF THE SHARES.
13.1 Exercise of Incentive Stock Option. If the Option qualifies
as an incentive stock option, there will be no regular federal income tax
liability or California income tax liability upon the exercise of the Option,
although the excess, if any, of the fair market value of the Shares on the date
of exercise over the Purchase Price Per Share will be treated as a tax
preference item for federal income tax purposes and may subject Purchaser to the
alternative minimum tax in the year of exercise.
13.2 Exercise of Nonqualified Stock Option. If the Option does
not qualify as an incentive stock option, there may be a regular federal income
tax liability and a California income tax liability upon the exercise of the
Option. Purchaser will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair
market value of the Shares on the date of exercise over the Purchase Price Per
Share. The Company will be required to withhold from Purchaser's compensation or
collect from Purchaser and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
13.3 Disposition of Shares. If the Shares are held for more than
twelve months after the date of the transfer of the Shares pursuant to the
exercise of the Option (and, in the case of an ISO, are disposed of more than
two years after the Option Date of Grant), any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within one
year of exercise or within two years after the Option Date of Grant, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the fair market
value of the Shares on the date of exercise over the Purchase Price Per Share.
The Company will be required to withhold from Purchaser's compensation or
collect from Purchaser and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
-10-
<PAGE>
14. Compliance with Laws and Regulations. The issuance and transfer of
the Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company's Common Stock may be listed or quoted at the time of such
issuance or transfer.
15. Successors and Assigns. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option and the Right of First Refusal. However, if the Company
assigns its right to repurchase Shares under the Repurchase Option, the assignee
will pay to the Company, in addition to the purchase price it pays to Purchaser,
the excess of the Fair Market Value of the Shares at the time of assignment over
the original Purchase Price of the Shares. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement will be binding
upon Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.
16. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Delaware as
such laws are applied to agreements between Delaware residents entered into and
to be performed entirely within Delaware, excluding that body of laws pertaining
to conflict of laws. If any provision of this Agreement is determined by a court
of law to be illegal or unenforceable, then such provision will be enforced to
the maximum extent possible and the other provisions will remain fully effective
and enforceable.
17. Notices. Any notice required to be given or delivered to the
Company shall be in writing and addressed to the Corporate Secretary of the
Company at its principal corporate offices. Any notice required to be given or
delivered to Purchaser shall be in writing and addressed to Purchaser at the
address indicated above or to such other address as Purchaser may designate in
writing from time to time to the Company. All notices shall be deemed
effectively given upon personal delivery, three (3) days after deposit in the
United States mail by certified or registered mail (return receipt requested),
one (1) business day after its deposit with any return receipt express courier
(prepaid), or one (1) business day after transmission by rapifax or telecopier.
18. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
19. Headings. The captions and headings of this Agreement are included
for ease of reference only and will be disregarded in interpreting or construing
this Agreement. All references herein to Sections will refer to Sections of this
Agreement.
20. Entire Agreement. The Plan, the Stock Option Agreement and this
Exercise Agreement, together with all its Exhibits, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Agreement, and supersede all prior understandings and agreements, whether
oral or written, between the parties hereto with respect to the specific subject
matter hereof.
11
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Purchaser has
executed this Agreement in duplicate as of the Effective Date.
EPILOGUE TECHNOLOGY CORPORATION
PURCHASER
By:
---------------------------- -----------------------------------
(Signature)
- -------------------------------
(Please print Name) -----------------------------------
(Please print name)
- -------------------------------
(Please print title)
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<PAGE>
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate from Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: California Commissioner Rule 260.141.11
Exhibit 4: Copy of Purchaser's Check
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<PAGE>
EXHIBIT 1
Stock Power and Assignment
Separate from Stock Certificate
FOR VALUE RECEIVED and pursuant to that certain Stock Option
Exercise Agreement No. ___ dated as of _______________, 19___, (the
"Agreement"), the undersigned hereby sells, assigns and transfers unto
_______________________________, shares of the Common Stock, par value $0.001
per share, of Epilogue Technology Corporation, a Delaware corporation (the
"Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No(s). ______ delivered herewith, and does hereby
irrevocably constitute and appoint the Secretary of the Company as the
undersigned's attorney-in-fact, with full power of substitution, to transfer
said stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS
AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.
Dated: _______________, 19____
PURCHASER
-----------------------------------
(Signature)
-----------------------------------
(Please Print Name)
-----------------------------------
(Spouse's Signature, if any)
-----------------------------------
(Please Print Spouse's Name)
Instructions: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
exercise its "Repurchase Option" and/or "Right of First Refusal" set forth in
the Agreement without requiring additional signatures on the part of the
Purchaser or Purchaser's Spouse.
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<PAGE>
EXHIBIT 2
Spouse Consent
The undersigned spouse of Purchaser has read, understands, and
hereby approves the Stock Option Exercise Agreement between Purchaser and the
Company (the "Agreement"). In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Agreement, the undersigned
hereby agrees to be irrevocably bound by the Agreement and further agrees that
any community property interest shall similarly be bound by the Agreement. The
undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.
Date:
-------------------------- -------------------------
Purchaser's Spouse
Address:
-------------------------
-------------------------
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<PAGE>
EXHIBIT 3
California Commissioner Rule 260.141.11
(a) The issuer of any security upon which a restriction on transfer has
been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534
shall cause a copy of this section to be delivered to each issuee or
transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale
or transfer of such security, or any interest therein, without the
prior written consent of the Commissioner (until this condition is
removed pursuant to Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of the Code
or Section 260.105.14 of these rules:
(4) to the transferor's ancestors, descendants or spouse, or any custodian
or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or
custodian for the account of the transferee or the transferee's
ancestors, descendants or spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation intervivos or on death;
(7) by or through a broker-dealer licensed under the Code (either acting as
such or as a finder) to a resident of a foreign state, territory or
country who is neither domiciled in this state to the knowledge of the
broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign
state, territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal transaction,
or as an underwriter or member of an underwriting syndicate or selling
group;
(9) if the interest sold or transferred is a pledge or other lien given by
the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule not
required;
(10) by way of a sale qualified under Section 25111, 25112, 25113, or 25121
of the Code, of the securities to be transferred, provided that no
order under Section 25140 or subdivision (a) of Section 25143 is in
effect with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such corporation, or
by a wholly owned subsidiary of a corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or 25113 of
the Code, provided that no order under Section 25140 or subdivision (a)
of Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or countries who are
neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property Law or the
administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law or by
the administrator of the unclaimed property law of another state if, in
either such case, such person (i) discloses to potential purchasers at
the sale that transfer of the securities is restricted under this rule,
(ii) delivers to each purchaser a copy of this rule, and (iii) advises
the Commissioner of the name of each purchaser;
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<PAGE>
(16) by a trustee to a successor trustee when such transfer does not involve
a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an issuer
transaction that is subject to the qualification requirements of
Section 25110 of the Code but exempt from that qualification
requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently
stamped or printed thereon in capital letters of not less than 10-point
size, reading as follows:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
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<PAGE>
EXHIBIT 4
COPY OF PURCHASER'S CHECK
-18-
EXHIBIT 5.01
September 26, 1996
Integrated Systems, Inc.
201 Moffett Park Drive
Sunnyvale, California 94089
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission on or about September 27, 1996 in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
69,033 shares of your Common Stock (the "Common Stock") to be sold by you
pursuant to stock options granted under the Epilogue Technology Corporation 1994
Stock Option Plan and assumed by you (the "Options"). The Options were assumed
by you pursuant to the terms of an Agreement and Plan of Reorganization dated as
of June 28, 1996 (the "Reorganization Agreement") by and among you, ISI Merger
Corporation, a Delaware corporation and your wholly owned subsidiary, and
Epilogue Technology Corporation, a Delaware corporation, and the related
Agreement of Merger dated July 29, 1996, which together with the Reorganization
Agreement effectuated a merger of ISI Merger Corporation with and into Epilogue
Technology Corporation.
As your counsel, we have examined the proceedings taken by you in
connection with the assumption of the Options to purchase your Common Stock.
It is our opinion that the number of shares of Common Stock that may be
issued and sold by you pursuant to the Options as indicated above, when issued
and sold in the manner referred to in the Prospectus associated with the
Registration Statement, the Epilogue Technology Corporation Stock Option Plan
and the Options, will be legally issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement and any amendments thereto.
Very truly yours,
/s/ Fenwick & West LLP
Fenwick & West LLP
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Integrated Systems, Inc. on Form S-8 of our reports dated March 27, 1996, on our
audits of the consolidated financial statements and financial statement schedule
of Integrated Systems, Inc. as of February 28, 1996 and 1995, and for each of
the three years in the period ended February 28, 1996, which reports are
included in the Registrant's Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
San Jose, California
September 26, 1996
