As filed with the Securities and Exchange Commission on July 11,1996
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MICROLOG CORPORATION
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(Exact name of registrant as specified in its charter)
Virginia 52-0901291
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(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
20270 Goldenrod Lane
Germantown, Maryland 20876
-------------------- -----
(Address of principal executive offices) (Zip code)
Microlog Corporation
1995 Stock Option Plan
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(Full title of the plan)
Richard A. Thompson
President
Microlog Corporation
20270 Goldenrod Lane
Germantown, Maryland 20876
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(Name, address and telephone number, including area code, of agent for service)
Copy to:
Steven M. Kaufman, Esq.
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5736
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
Proposed Proposed
Title of securities Amount to be registered maximum offering price maximum aggregate Amount of
to be registered per share (1) offering price (1) registration fee (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 1,000,000 $9.25 $9,250,000 $3,189.66
per share
================================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
amount of the registration fee, based on the average of the high and low prices
per share of Microlog Corporation common stock, par value $.01 per share, on
July 9, 1996, as reported on The Nasdaq National Market.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I
will be sent or given to employees as specified by Rule 428(b)(1) of the
Securities Act of 1933, as amended (the "Securities Act"). In accordance with
the instructions to Part I of Form S-8, such documents will not be filed with
the Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Microlog Corporation (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents filed by it
with the Commission:
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995;
(b) All reports filed with the Commission pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") since October 31, 1995;
and
(c) The description of the Registrant's common stock,
$.01 par value per share (the "Common Stock")
contained in the Registrant's Registration Statement
on Form 8-A filed with the Commission on August 8,
1986.
In addition, all documents and reports filed by the Registrant
subsequent to the date hereof pursuant to Sections 13(a), 13(c), 14, or 15(d) of
the Exchange Act, and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities remaining unsold, shall be deemed to be incorporated by reference in
this Registration Statement and to be part of hereof from the date of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequent filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable (the Common Stock is registered under Section
12 of the Exchange Act).
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Each director and officer of the Registrant is insured and
indemnified against liability incurred by him or her in his or her capacity as
an officer and/or director pursuant to the following:
(a) Article VII of the Registrant's Bylaws, entitled
"Indemnification and Limitation of Liability," provides for indemnification of
directors and officers to the fullest extent permitted by the laws of the
Commonwealth of Virginia, limits the liability of directors and officers as
permitted by such laws and permits the Registrant to purchase and maintain
insurance on behalf of each director and officer of the Registrant against
certain liabilities which he or she may incur whether or not the Registrant
could have the power or obligation to indemnify him or her. Article VII of the
Registrant's Bylaws is set forth as Exhibit 99.1 to this Registration Statement
and is incorporated herein by reference.
(b) Sections 13.1-692.1, 13.1-697, 13.1-698, 13.1-702,
13.1-703 and 13.1-704 of the Virginia Stock Corporation Act, which are set forth
as Exhibit 99.2 to this Registration Statement and are incorporated herein by
reference.
(c) The Registrant has in effect a policy of liability
insurance covering its directors and officers against damages from certain
actions and claims incurred in the course of their duties. Such policy also
insures the Registrant against expenses incurred in defending lawsuits arising
from certain alleged acts of the directors and officers.
* * *
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
therefore is unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by such person in connection with the
offering of the Common Stock (other than for the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
company in the successful defense of any action, suit or proceeding) 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 of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of the issue.
Item 7. Exemption from Registration Claimed.
Not applicable.
-2-
<PAGE>
Item 8. Exhibits.
Exhibit
Number Description
------ -----------
4.1 Amended and Restated Articles of
Incorporation of Registrant, as amended
(incorporated by reference to an Exhibit to
Registration Statement on Form S-1 (File No.
33-31710)).
4.2 Bylaws of the Registrant, as amended
(incorporated by reference to an Exhibit to
Registration Statement on Form S-1 (File No.
33-31710)).
4.3 Form of Common Stock Certificate
(incorporated by reference to an Exhibit to
Registration Statement on Form S-1 (File No.
33-31710)).
4.4 Microlog Corporation 1995 Stock Option Plan,
as amended and restated.
5.1 Opinion of Hogan & Hartson, L.L.P. regarding
the legality of the securities being
registered.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included
in their opinion filed as Exhibit 5.1
hereto).
24.1 Power of Attorney (included on signature
pages).
99.1 Article VII of the Bylaws of Microlog
Corporation.
99.2 Sections 13.1-692.1, 13.1-697, 13.1-698,
13.1-702, 13.1-703 and 13.1-704 of the
Virginia Stock Corporation Act.
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(a) 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;
(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.
-3-
<PAGE>
Provided, however, that paragraphs (a)(i) and (a)(ii)
do not apply if the Registration Statement is on Form S-3 or
Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(b) 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.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
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.
The undertaking concerning indemnification is set forth under
the response to Item 6.
-4-
<PAGE>
Pursuant to the requirements of the Securities Act, 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 Germantown, State of Maryland, on July 2, 1996.
Microlog Corporation
By: /s/ Joe J. Lynn
---------------------------------------
Joe J. Lynn
Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Joe J. Lynn, Richard A. Thompson and
Steven R. Delmar, jointly and severally, each in his own capacity, as true and
lawful attorneys-in-fact, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Joe J. Lynn Chief Executive Officer and Director July 2, 1996
- ----------------------------------------
Joe J. Lynn
/s/ Richard A. Thompson President, Chief Operating Officer and July 2, 1996
- ---------------------------------------- Director
Richard A. Thompson
/s/ Steven R. Delmar Executive Vice President and Chief July 2, 1996
- ---------------------------------------- Financial Officer (Principal
Steven R. Delmar Accounting Officer)
-5-
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ J. Graham Hartwell Chairman of the Board and Director July 2, 1996
- ----------------------------------------
J. Graham Hartwell
/s/ David M. Gische Director July 2, 1996
- ----------------------------------------
David M. Gische
- ---------------------------------------- Director July __, 1996
Robert E. Gray, Jr.
</TABLE>
-6-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
4.1 Amended and Restated Articles of Incorporation of Registrant, as amended *
(incorporated by reference to an Exhibit to Registration Statement on Form S-1 (File
No. 33-31710)).
4.2 Bylaws of the Registrant, as amended (incorporated by reference to an Exhibit to *
Registration Statement on Form S-1 (File No. 33-31710)).
4.3 Form of Common Stock Certificate (incorporated by reference to an Exhibit to *
Registration Statement on Form S-1 (File No. 33-31710)).
4.4 Microlog Corporation 1995 Stock Option Plan, as amended and restated.
5.1 Opinion of Hogan & Hartson L.L.P.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Hogan & Hartson L.L.P. (See Exhibit 5.1)
24.1 Power of Attorney (included on signature page).
99.1 Article VII of the Bylaws of Microlog Corporation.
99.2 Sections 13.1-692.1, 13.1-697, 13.1-698, 13.1-702, 13.1-703 and 13.1-704 of the
Virginia Stock Corporation Act.
<FN>
*incorporated by reference
</FN>
</TABLE>
Exhibit 4.4
MICROLOG CORPORATION
1995 STOCK OPTION PLAN
Microlog Corporation (the "Corporation") sets forth herein the
terms of this 1995 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the
Corporation by providing eligible individuals (as designated pursuant to Section
4 below) with an opportunity to acquire or increase a proprietary interest in
the Corporation, which thereby will create a stronger incentive to expend
maximum effort for the growth and success of the Corporation and its
subsidiaries, and will encourage such eligible individuals to remain in the
employ of the Corporation or one or more of its subsidiaries. Each stock option
granted under the Plan (an "Option") is intended to be an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
or the corresponding provision of any subsequently-enacted tax statute, as
amended from time to time (the "Code") ("Incentive Stock Option"), except (i) to
the extent that any such Option would exceed the limitations set forth in
Section 7 below; and (ii) for Options specifically designated at the time of
grant as not being "incentive stock options."
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the
Board of Directors of the Corporation (the "Board"), which shall have the full
power and authority to take all actions, and to make all determinations required
or provided for under the Plan or any Option granted or Option Agreement (as
defined in Section 8 below) entered into hereunder and all such other actions
and determinations not inconsistent with the specific terms and provisions of
the Plan deemed by the Board to be necessary or appropriate to the
administration of the Plan or any Option granted or Option Agreement entered
into hereunder. All such actions and determinations shall be by the affirmative
vote of a majority of the members of the Board present at a meeting at which any
issue relating to the Plan is properly raised for consideration or without a
meeting by written consent of the Board executed in accordance with the
Corporation's Certificate of Incorporation and By-Laws, and with applicable law.
The interpretation and construction by the Board of any provision of the Plan or
of any Option granted or Option Agreement entered into hereunder shall be final
and conclusive.
(b) Committee. The Board may from time to time
appoint a Stock Option Committee (the "Committee") consisting of not less than
two members of the Board, none of whom shall be an officer or other salaried
employee of the Corporation or any of its subsidiaries, and each of whom shall
qualify in all respects as
<PAGE>
a "disinterested person" as defined in Rule l6b-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Board, in its sole discretion, may provide that the role of the
Committee shall be limited to making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board pursuant to or
with respect to the Plan, or the Board may delegate to the Committee such powers
and authorities related to the administration of the Plan, as set forth in
Section 2(a) above, as the Board shall determine, consistent with the
Certificate of Incorporation and By-Laws of the Corporation and applicable law.
The Board may remove members, add members, and fill vacancies on the Committee
from time to time, all in accordance with the Corporation's Certificate of
Incorporation and By-Laws, and with applicable law. The majority vote of the
Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee.
(c) No Liability. No member of the Board or of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted or Option Agreement entered into
hereunder.
(d) Delegation to the Committee. In the event that
the Plan or any Option granted or Option Agreement entered into hereunder
provides for any action to be taken by or determination to be made by the Board,
such action may be taken by or such determination may be made by the Committee
if the power and authority to do so has been delegated to the Committee by the
Board as provided for in Section 2(b) above. Unless otherwise expressly
determined by the Board, any such action or determination by the Committee shall
be final and conclusive.
(e) Action by the Board. The Board may act under the
Plan with respect to any Option granted to or Option Agreement entered into with
an officer, director or shareholder of the Corporation who is subject to Section
16 of the Exchange Act other than by, or in accordance with the recommendations
of, the Committee, constituted as set forth in Section 2(b) above, only if the
Board satisfies the requirements of Rule 16b-3 of the Securities and Exchange
Commission under the Exchange Act relating to "disinterested administration."
3. STOCK
The stock that may be issued pursuant to Options granted under
the Plan shall be shares of Common Stock, par value $.01 per share, of the
Corporation (the "Stock"), which shares may be treasury shares or authorized but
unissued shares. The number of shares of Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate 1,000,000
shares. The foregoing number of shares are subject to adjustment as provided in
Section 17 below. If any Option expires, terminates, or is terminated or
canceled for any reason prior to exercise in full, the shares of Stock that were
subject to the unexercised portion of such Option shall be available for future
Options granted under the Plan.
2
<PAGE>
4. ELIGIBILITY
Options may be granted under the Plan to any employee of the
Corporation or any "subsidiary corporation" (a "Subsidiary") thereof within the
meaning of Section 424(f) of the Code (including any such employee who is an
officer or director of the Corporation or any Subsidiary) as the Board shall
determine and designate from time to time prior to expiration or termination of
the Plan. The maximum number of shares of Stock subject to Options that may be
granted under the Plan to any executive officer or other employee of the
Corporation or any Subsidiary is 500,000 shares (subject to adjustment as
provided in Section 17 hereof). An individual may hold more than one Option,
subject to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as
of the date of adoption by the Board, which date is set forth below, subject to
approval of the Plan within one year of such effective date by the affirmative
votes of the holders of a majority of the Stock of the Corporation present, or
represented, and entitled to vote at a meeting duly held in accordance with
applicable law; provided, however, that upon approval of the Plan by the
shareholders of the Corporation as set forth above, all Options granted under
the Plan on or after the effective date shall be fully effective as if the
shareholders of the Corporation had approved the Plan on the effective date. If
the shareholders fail to approve the Plan within one year of such effective
date, any options granted hereunder shall be null and void and of no effect.
(b) Term. The Plan shall terminate on the date ten
years from the effective date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board
may, at any time and from time to time, prior to the date of termination of the
Plan, grant to such eligible individuals as the Board may determine
("Optionees"), Options to purchase such number of shares of the Stock on such
terms and conditions as the Board may determine, including any terms or
conditions which may be necessary to qualify such Options as Incentive Stock
Options. The date on which the Board approves the grant of an Option (or such
later date as is specified by the Board) shall be considered the date on which
such Option is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in exception (ii) of
Section 1) shall constitute an Incentive Stock Option to the extent that the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any
3
<PAGE>
calendar year (under the Plan and all other plans of the Optionee's employer
corporation and its parent and subsidiary corporations within the meaning of
Section 422(d) of the Code) does not exceed $100,000. This limitation shall be
applied by taking Options into account in the order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements ("Option Agreements"), to be executed by the Corporation and
by the Optionee, in such form or forms as the Board shall from time to time
determine. Option Agreements covering Options granted from time to time or at
the same time need not contain similar provisions; provided, however, that all
such Option Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an
Option (the "Option Price") shall be fixed by the Board and stated in each
Option Agreement, except that the Option Price of a share of Stock subject to an
Option that is intended to constitute an Incentive Stock Option shall be not
less than 100 percent of the fair market value of a share of the Stock on the
date the Option is granted (as determined in good faith by the Board); provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than ten percent), the
Option Price of an Option that is intended to be an Incentive Stock Option shall
be not less than 110 percent of the fair market value of a share of Stock at the
time such Option is granted. In the event that the Stock is listed on an
established national or regional stock exchange, is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System, or is
publicly traded on an established securities market, in determining the fair
market value of the Stock, the Board shall use the closing price of the Stock on
such exchange or System or in such market (the highest such closing price if
there is more that one such exchange or market) on the trading date immediately
before the Option is granted (or, if there is no such closing price, then the
Board shall use the mean between the high and low prices on such date), or, if
no sale of the Stock had been made on such day, on the next preceding day on
which any such sale shall have been made.
10. TERM AND EXERCISE OF OPTIONS
(a) Term. Each Option granted under the Plan shall
terminate and all rights to purchase shares thereunder shall cease upon the
expiration of ten years from the date such Option is granted, or on such date
prior thereto as may be fixed by the Board and stated in the Option Agreement
relating to such Option; provided, however, that in the event the Optionee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and
4
<PAGE>
424(d) of the Code (relating to stock ownership of more than ten percent), an
Option granted to such Optionee that is intended to be an Incentive Stock Option
shall in no event be exercisable after the expiration of five years from the
date it is granted.
(b) Option Period and Limitations on Exercise. Each
Option shall be exercisable, in whole or in part, at any time and from time to
time, over a period commencing on or after the date of grant and ending upon the
expiration or termination of the Option, as the Board shall determine and set
forth in the Option Agreement relating to such Option. Without limiting the
foregoing, the Board, subject to the terms and conditions of the Plan, may in
its sole discretion provide that an Option may not be exercised in whole or in
part for any period or periods of time during which such Option is outstanding;
provided, however, that any such limitation on the exercise of an Option
contained in any Option Agreement may be rescinded, modified or waived by the
Board, in its sole discretion, at any time and from time to time after the date
of grant of such Option, so as to accelerate the time at which the Option may be
exercised. Each Option shall be exercisable, in whole or in part, at any time
and from time to time, over a period commencing on the date of grant and ending
upon the expiration of the Option. Notwithstanding any other provision of the
Plan, no Option granted to an Optionee under the Plan shall be exercisable in
whole or in part prior to the date the Plan is approved by the shareholders of
the Corporation as provided in Section 5 above.
(c) Method of Exercise. An Option that is exercisable
hereunder may be exercised by delivery to the Corporation on any business day,
at its principal office, addressed to the attention of the Committee, of written
notice of exercise, which notice shall specify the number of shares with respect
to which the Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in part, at any
time shall be the lesser of 100 shares or the maximum number of shares available
for purchase under the Option at the time of exercise. Except as provided below,
payment in full of the Option Price of the shares for which the Option is being
exercised shall accompany the written notice of exercise of the Option and shall
be made either (i) in cash or in cash equivalents; (ii) through the tender to
the Corporation of shares of Stock, which shares shall be valued, for purposes
of determining the extent to which the Option Price has been paid thereby, at
their fair market value (determined in the manner described in Section 9 above)
on the date of exercise; or (iii) by a combination of the methods described in
(i) and (ii); provided, however, that the Board may in its discretion impose and
set forth in the Option Agreement such limitations or prohibitions on the use of
shares of Stock to exercise Options as it deems appropriate. If shares of Stock
that are acquired by the Optionee through exercise of an Option or an option
issued under another stock option plan maintained by the Corporation are
surrendered in payment of the Option Price, the Stock surrendered in payment
must have been (i) held by the Optionee for more than six months at the time of
surrender, or (ii) acquired under an Option granted not less than six months
prior to the time of surrender. Unless the Board shall provide otherwise in the
case of an Option Agreement, payment in full of
5
<PAGE>
the Option Price need not accompany the written notice of exercise provided the
notice of exercise directs that the Stock certificate or certificates for the
shares for which the Option is exercised be delivered to a licensed broker
acceptable to the Corporation as the agent for the individual exercising the
Option and, at the time such Stock certificate or certificates are delivered,
the broker tenders to the Corporation cash (or cash equivalents acceptable to
the Corporation) equal to the Option Price for the shares of Stock purchased
pursuant to the exercise of the Option plus the amount (if any) of federal and
other taxes which the Corporation may, in its judgment, be required to withhold
with respect to the exercise of the Option. An attempt to exercise any Option
granted hereunder other than as set forth above shall be invalid and of no force
and effect. Promptly after the exercise of an Option and the payment in full of
the Option Price of the shares of Stock covered thereby, the individual
exercising the Option shall be entitled to the issuance of a Stock certificate
or certificates evidencing his ownership of such shares. A separate Stock
certificate or certificates shall be issued for any shares purchased pursuant to
the exercise of an Option which is an Incentive Stock Option, which certificate
or certificates shall not include any shares which were purchased pursuant to
the exercise of an Option which is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a shareholder
until the shares of Stock covered thereby are fully paid and issued to him and,
except as provided in Section 17 below, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
(d) Restrictions on Transfer of Stock. If an Option
is exercised prior to the date that is six months from the later of (i) the date
of grant of the Option or (ii) the date of shareholder approval of the Plan and
the individual exercising the Option is a reporting person under Section 16(a)
of the Exchange Act, then such certificate or certificates shall bear a legend
restricting the transfer of the Stock covered thereby until the expiration of
six months from the later of the date specified in clause (i) above or the date
specified in clause (ii) above.
11. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee to whom an Option is
granted, only such Optionee (or, in the event of legal incapacity or
incompetence, the Optionee's guardian or legal representative) may exercise the
Option. No Option shall be assignable or transferable by the Optionee to whom it
is granted, other than by will or the laws of descent and distribution.
12. TERMINATION OF EMPLOYMENT
Upon the termination of the employment of an Optionee with the
Corporation or a Subsidiary, other than by reason of the death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, any Option granted to an Optionee pursuant to the Plan shall
terminate, and such
6
<PAGE>
Optionee shall have no further right to purchase shares of Stock pursuant to
such Option; provided, however, that in the event that such termination of
employment is by reason of the Optionee's retirement in accordance with the
normal retirement policies of the Corporation or a Subsidiary, as the case may
be, then such Optionee shall have the right, at any time within three months
after the date of such retirement (or such shorter period as may be specified in
an Option Agreement), and prior to termination of the Option pursuant to Section
10(a) above, to exercise, in whole or in part, any Option held by such Optionee
at the date of such retirement, whether or not such Option was exercisable
immediately before such retirement; provided, further, that the Board may
provide, by inclusion of appropriate language in any Option Agreement, that the
Optionee may (subject to the general limitations on exercise set forth in
Section 10(b) above), in the event of termination of employment of the Optionee
with the Corporation or a Subsidiary, exercise an Option, in whole or in part,
at any time subsequent to such termination of employment and prior to
termination of the Option pursuant to Section 10(a) above, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 10(b) above. Whether a termination of employment is to be considered by
reason of retirement in accordance with the normal retirement policies of the
Corporation or a Subsidiary, as the case may be, and whether a leave of absence
or leave on military or government service shall constitute a termination of
employment for purposes of the Plan shall be determined by the Board, which
determination shall be final and conclusive. For purposes of the Plan, a
termination of employment with the Corporation or a Subsidiary shall not be
deemed to occur if the Optionee is immediately thereafter employed by the
Corporation or any Subsidiary.
13. RIGHTS IN THE EVENT OF DEATH, DISABILITY OR CHANGE IN CONTROL
(a) Death of an Employee. If an Optionee dies while
in the employ of the Corporation or a Subsidiary or within the period following
the termination of employment during which the Option is exercisable under
Section 12 above or Section 13(b) below, the executors or administrators or
legatees or distributees of such Optionee's estate shall have the right (subject
to the general limitations on exercise set forth in Section 10(b) above), at any
time within one year after the date of such Optionee's death and prior to
termination of the Option pursuant to Section 10(a) above (or such shorter
period as may be specified in an Option Agreement), to exercise any Option held
by such Optionee at the date of such Optionee's death, whether or not such
Option was exercisable immediately prior to such Optionee's death; provided,
however, that the Board may provide by inclusion of appropriate language in any
Option Agreement that, in the event of the death of the Optionee, the executors
or administrators or legatees or distributees of such Optionee's estate may
exercise an Option (subject to the general limitations on exercise set forth in
Section 10(b) above), in whole or in part, at any time subsequent to such
Optionee's death and prior to termination of the Option pursuant to
7
<PAGE>
Section 10(a) above, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 10(b) above.
(b) Disability of an Employee. If an Optionee
terminates employment with the Corporation or a Subsidiary by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee, then such Optionee shall have the right (subject to the
general limitations on exercise set forth in Section 10(b) above), at any time
within one year after such termination of employment and prior to termination of
the Option pursuant to Section 10(a) above (or such shorter period as may be
specified in an Option Agreement), to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of employment, whether or
not such Option was exercisable immediately prior to such termination of
employment; provided, however, that the Board may provide, by inclusion of
appropriate language in any Option Agreement, that the Optionee may (subject to
the general limitations on exercise set forth in Section 10(b) above), in the
event of the termination of employment of the Optionee with the Corporation or a
Subsidiary by reason of the "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, exercise an Option in whole
or in part, at any time subsequent to such termination of employment and prior
to termination of the Option pursuant to Section 10(a) above, either subject to
or without regard to any installment limitation on exercise imposed pursuant to
Section 10(b) above. Whether a termination of employment is to be considered by
reason of "permanent and total disability" for purposes of this Plan shall be
determined by the Board, which determination shall be final and conclusive.
(c) Change in Control. Except as otherwise provided
in Section 17(f) below, in the event of the occurrence of a Change in Control
(as defined below) or in the event that the Board, in its sole and absolute
discretion, determines that there exists a threat of a Change in Control, each
Option issued before the date of such occurrence or such determination, which
Option has not theretofore terminated as provided in Section 10(a) above, shall
immediately become exercisable in full as of the date of such occurrence or such
determination, whether or not such Option was otherwise exercisable immediately
before such occurrence or such determination. For purposes of this Plan, a
"Change in Control" shall be deemed to occur if, at any time, any person
(including, without limitation, any individual, sole proprietorship,
partnership, trust, corporation, association, joint venture, pool, syndicate or
other entity, whether or not incorporated), or any two or more persons acting as
a syndicate or group and thereby deemed collectively to be a "person" within the
meaning of Section 13(d)(3) of the Exchange Act, shall acquire shares of stock
of the Corporation, which acquisition results in such person or persons owning
in the aggregate shares of stock of the Company possessing 20 percent or more of
the total combined voting power of all classes of stock of the Corporation,
unless prior to such acquisition the full Board shall by at least a two-thirds
vote have specifically approved such acquisition and determined that such
acquisition shall not constitute a Change in Control for purposes of the Plan.
Whether there exists a threat of a Change in Control for
8
<PAGE>
purposes of this Plan shall be determined by the Board, which determination
shall be final and conclusive.
14. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of
Stock pursuant to Options granted under the Plan shall constitute general funds
of the Corporation.
15. REQUIREMENTS OF LAW
(a) Violations of Law. The Corporation shall not be
required to sell or issue any shares of Stock under any Option if the sale or
issuance of such shares would constitute a violation by the individual
exercising the Option or the Corporation of any provisions of any law or
regulation of any governmental authority, including without limitation any
federal or state securities laws or regulations. Specifically in connection with
the Securities Act of 1933 (as now in effect or as hereafter amended), upon
exercise of any Option, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such Option, the Company
shall not be required to sell or issue such shares unless the Board has received
evidence satisfactory to it that the holder of such Option may acquire such
shares pursuant to an exemption from registration under such Act. Any
determination in this connection by the Board shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended). The Corporation shall not be obligated to take
any affirmative action in order to cause the exercise of an Option or the
issuance of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The intent of this
Plan is to qualify for the exemption provided by Rule 16b-3 under the Exchange
Act. To the extent any provision of the Plan does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board and shall not affect the
validity of the Plan. In the event Rule 16b-3 is revised or replaced, the Board,
or the Committee acting on behalf of the Board, may exercise discretion to
modify this Plan in any respect necessary to satisfy the requirements of the
revised exemption or its replacement.
9
<PAGE>
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to which Options have
not been granted; provided, however, that no amendment by the Board shall,
without approval by a majority of the votes present and entitled to vote at a
duly held meeting of the shareholders of the Corporation at which a quorum
representing a majority of all outstanding voting stock is, either in person or
by proxy, present and voting on the amendment, or by written consent in
accordance with applicable state law and the Certificate of Incorporation and
By-Laws of the Corporation, materially increase the benefits accruing to
participants under the Plan, change the requirements as to eligibility to
receive Options or increase the maximum number of shares of Stock in the
aggregate that may be sold pursuant to Options granted under the Plan (except as
permitted under Section 17 hereof). Except as permitted under Section 17 hereof,
no amendment, suspension or termination of the Plan shall, without the consent
of the holder of the Option, alter or impair rights or obligations under any
Option theretofore granted under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Stock. If the outstanding shares of
Stock are increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Corporation by reason of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Corporation, occurring after the effective date
of the Plan, the number and kinds of shares for the purchase of which Options
may be granted under the Plan shall be adjusted proportionately and accordingly
by the Corporation. In addition, the number and kind of shares for which Options
are outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the holder of the Option immediately following such
event shall, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares subject to the unexercised portion
of the Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share.
(b) Reorganization in Which the Corporation Is the
Surviving Corporation. Subject to Subsection (c) hereof, if the Corporation
shall be the surviving corporation in any reorganization, merger, or
consolidation of the Corporation with one or more other corporations, any Option
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to such
Option would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter
10
<PAGE>
shall be the same as the aggregate Option Price of the shares remaining subject
to the Option immediately prior to such reorganization, merger, or
consolidation.
(c) Reorganization in Which the Corporation Is Not
the Surviving Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of the Corporation, or upon a merger, consolidation, reorganization
or other business combination of the Corporation with one or more other entities
in which the Corporation is not the surviving entity, or upon a sale of all or
substantially all of the assets of the Corporation to another entity, or upon
any transaction (including, without limitation, a merger or reorganization in
which the Corporation is the surviving corporation) approved by the Board which
results in any person or entity (or persons or entities acting as a group or
otherwise in concert) owning 80 percent or more of the combined voting power of
all classes of stock of the Corporation, the Plan and all Options outstanding
hereunder shall terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan and/or the
assumption of the Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and exercise prices, in which event the Plan and Options theretofore
granted shall continue in the manner and under the terms so provided. In the
event of any such termination of the Plan, each individual holding an Option
shall have the right (subject to the general limitations on exercise set forth
in Section 10(b) above and except as otherwise specifically provided in the
Option Agreement relating to such Option), immediately prior to the occurrence
of such termination and during such period occurring prior to such termination
as the Board in its sole discretion shall determine and designate, to exercise
such Option in whole or in part, whether or not such Option was otherwise
exercisable at the time such termination occurs and without regard to any
installment limitation on exercise imposed pursuant to Section 10(b) above. The
Board shall send written notice of an event that will result in such a
termination to all individuals who hold Options not later than the time at which
the Corporation gives notice thereof to its shareholders.
(d) Adjustments. Adjustments under this Section 17
related to stock or securities of the Corporation shall be made by the Board,
whose determination in that respect shall be final, binding, and conclusive. No
fractional shares of Stock or units of other securities shall be issued pursuant
to any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole share
or unit.
(e) No Limitations on Corporation. The grant of an
Option pursuant to the Plan shall not affect or limit in any way the right or
power of the Corporation to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge, consolidate,
dissolve or liquidate, or to sell or transfer all or any part of its business or
assets.
11
<PAGE>
(f) Parachute Payments. Notwithstanding any other
provision of the Plan, if any payment, grant or acceleration of exercisability
of an Option or other benefit to an Optionee under this Plan (a "Plan Benefit")
would otherwise constitute a "parachute payment" within the meaning of Code
Section 280G(b)(2) and if, after reduction for any applicable federal excise tax
imposed by Code Section 4999 (the "Excise Tax") and federal income tax imposed
by the Code, the Optionee's net proceeds from receiving the Plan Benefit would
be less than the amount of the Optionee's net proceeds resulting from the
receipt of the Reduced Amount described below, after reduction for federal
income taxes, then the Optionee's Plan Benefit shall be limited to the Reduced
Amount. The "Reduced Amount" shall be the largest Plan Benefit that could be
received by the Optionee such that no Plan Benefit and no other payment or other
benefit under any other agreement, contract, or understanding heretofore or
hereafter entered into between the Optionee and the Corporation or any
Subsidiary (the "Other Agreements") and any formal or informal plan or other
arrangement heretofore or hereafter adopted by the Corporation or any Subsidiary
for the direct or indirect provision of compensation to the Optionee (including
groups or classes of participants or beneficiaries of which the Optionee is a
member), whether or not such compensation is deferred, is in cash, or is in the
form of a benefit to or for the Optionee (a "Benefit Plan") would be subject to
the Excise Tax. In the event that the Plan Benefit to the Optionee shall be
limited to the Reduced Amount, then the Optionee shall have the right, in the
Optionee's sole discretion, to designate the Plan Benefit and those payments or
benefits under any Other Agreements and any Benefit Plans that should be reduced
or eliminated so as to avoid having the Plan Benefit be subject to the Excise
Tax.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option
Agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ of the Corporation or any
Subsidiary, or to interfere in any way with the right and authority of the
Corporation or any Subsidiary either to increase or decrease the compensation of
any individual at any time, or to terminate any employment or other relationship
between any individual and the Corporation or any Subsidiary.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the
Plan to the shareholders of the Corporation for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt such
other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
12
<PAGE>
This Plan was duly adopted and approved by the Board of
Directors of the Corporation by resolution at a meeting held on the 28th day of
September, 1995 and amended by the Board of Directors of the Corporation by
resolution at a meeting held on the 20th day of December, 1995.
-------------------------------
Secretary of the Corporation
This Plan was duly approved by the shareholders of the
Corporation at a meeting held on the 26th day of March, 1996.
-------------------------------
Secretary of the Corporation
Exhibit 5.1
HOGAN & HARTSON
L.L.P.
COLUMBIA SQUARE
555 THIRTEENTH STREET, NW
WASHINGTON, DC 20004-1109
TEL (202) 637-5600
FAX (202) 637-5910
July 11, 1996
Board of Directors
Microlog Corporation
20270 Goldenrod Lane
Germantown, Maryland 20874
Dear Gentlemen:
This firm has acted as special counsel to Microlog Corporation
(the "Company"), a Virginia corporation, in connection with its registration,
pursuant to a registration statement on Form S-8 filed on or about the date
hereof (the "Registration Statement"), of 1,000,000 shares (the "Shares") of
common stock, par value $.01 per share of Microlog Corporation ("Common Stock"),
issuable upon the exercise of options granted under the Microlog Corporation
1995 Stock Option Plan, as amended and restated (the "Plan"). This letter is
furnished to you pursuant to the requirements of Item 601(b)(5) of Regulation
S-K, 17 C.F.R. ss. 229.601(b)(5), in connection with such registration.
For purposes of this opinion, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. A copy of the Plan, as certified on July 11, 1996, by
the Secretary of the Company as then being complete,
accurate and in effect.
3. The Amended and Restated Articles of Incorporation of
the Company, as amended, as certified on May 6, 1996
by the Commonwealth of Virginia State Corporation
Commission and on July 11, 1996 by the Secretary of
the Company as then being complete, accurate and in
effect.
<PAGE>
HOGAN & HARTSON L.L.P.
Board of Directors
July 11, 1996
Page 2
4. The By-laws of the Company, as amended, as certified
on July 11, 1996 by the Secretary of the Company as
then being complete, accurate and in effect.
5. Resolutions of the Board of Directors of the Company
adopted at meetings held on September 28, 1995,
December 20, 1995 and July 2, 1996, all of the
foregoing resolutions as certified by the Secretary
of the Company on July 11, 1996 as then being
complete, accurate and in effect.
6. Resolutions of the shareholders of the Company
adopted at a meeting held on March 26, 1996, as
certified by the Secretary of the Company on July 11,
1996 as then being complete, accurate and in effect.
We have not, except as specifically mentioned above, made any
independent review or investigation of the organization, existence, good
standing, assets, business or affairs of the Company or its subsidiaries, or of
any other matters. In our examination of the aforesaid certificates, records,
and documents, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals, and the authenticity and conformity with the original documents of
all documents submitted to us as certified, telecopied, photostatic, or
reproduced copies. We have assumed the authenticity and accuracy of the
foregoing certifications of corporate officers, on which we are relying, and
have made no independent investigations thereof.
We have not, except as specifically identified herein, been
retained or engaged to perform, nor have we performed, any independent review or
investigation of any statutes, ordinances, laws, regulations, agreements,
contracts, instruments, or corporate records to which the Company or any of its
property may be a party or may be subject. This opinion is given in the context
of the foregoing.
This opinion is based as to matters of law solely on the Stock
Corporation Act of the Commonwealth of Virginia, as amended, and we express no
opinion as to any other laws, statutes, regulations, or ordinances, including
without limitation any federal or state tax or securities laws or regulations.
We note that our firm only requires lawyers to be qualified to practice law in
the District of Columbia, Virginia, or Maryland.
<PAGE>
HOGAN & HARTSON L.L.P.
Board of Directors
July 11, 1996
Page 3
Based upon, subject to, and limited by the foregoing, we are
of the opinion that the Shares, when issued and delivered in the manner and on
the terms contemplated in the Registration Statement and the Plan (with the
Company having received the consideration therefor, the form of which is in
accordance with applicable law), will be validly issued, fully paid and
non-assessable.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion. This opinion has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this letter, and should not be quoted in whole or in
part or otherwise be referred to, nor be filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this form.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. Nothing herein shall be construed to cause us to
be considered "experts" within the meaning of Section 11 of the Securities Act
of 1933, as amended, or the rules thereunder.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
------------------------------
HOGAN & HARTSON L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated December 22, 1995, which appears on
page 22 of the 1995 Annual Report to Shareholders of Microlog Corporation, which
is incorporated by reference in Microlog Corporation's Annual Report on Form
10-K for the year ended October 31, 1995. We also consent to the incorporation
by reference of our report on the Financial Statement Schedule, which appears on
page F-2 of such Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Washington, DC
July 8, 1996
Exhibit 99.1
ARTICLE VII OF THE BYLAWS OF MICROLOG CORPORATION
ARTICLE VII
Indemnification and Limitation of Liability
-------------------------------------------
7.01 Limitation of Liability. To the fullest extent permitted by
the laws of the Commonwealth of Virginia, as presently in effect or as the same
hereafter may be amended and supplemented, in any proceeding brought by a
shareholder in the right of the corporation or brought by or on behalf of
shareholders of the corporation, the damages assessed against an officer or
director arising out of a single transaction, occurrence or course of conduct
shall not exceed the sum of one dollar. The liability of an officer or director
shall not be limited as provided in this Section 7.01 if the officer or director
engaged in willful misconduct or a knowing violation of the criminal law or any
federal or state securities law, including without limitation, any claim of
unlawful insider trading or manipulation of the market for any security.
7.02 Obligation to Indemnify. The corporation shall to the
fullest extent permitted by the laws of the Commonwealth of Virginia, as
presently in effect or as the same hereafter may be amended and supplemented,
indemnify an individual who is or was a director or officer of the corporation
and who was, is, or is threatened to be made a named defendant or respondent in
any threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal
(collectively, a "proceeding"), against any obligation to pay a judgment,
settlement, penalty, fine (including any excise tax assessed with respect to any
employee benefit plan) or other liability and reasonable expenses (including
counsel fees) incurred with respect to such a proceeding, except such
liabilities and expenses as are incurred because of such director's or officer's
willful misconduct or knowing violation of the criminal law. The corporation is
authorized to contract in advance to indemnify and make advances and
reimbursements for expenses to any of its directors or officers to the same
extent provided in Sections 7.02 through 7.05 of this Article VII.
7.03 Advances. Unless a determination has been made that
indemnification is not permissible, the corporation shall make advances and
reimbursements for expenses reasonably incurred by a director or officer in a
proceeding as described in Section 7.02 of this Article VII upon receipt of an
undertaking from such director or officer to repay the same if it is ultimately
determined that such director or officer is not entitled to indemnification.
Such undertaking shall be an unlimited, unsecured general obligation of the
director or officer and shall be accepted without reference to such director's
or officer's ability to make repayment.
7.04 Determinations Concerning Indemnification. The
determination that indemnification under this Article VII is permissible, the
authorization of such indemnification (if applicable), and the evaluation as to
the reasonableness of expenses in a specific case shall be made as authorized
from time to time by general or specific action of the Board of Directors, which
action may be taken before or after a claim for indemnification is made, or as
otherwise provided by law; provided, however, that if a majority of the
directors of the corporation has changed after the date of the alleged conduct
giving rise to a claim for indemnification, such determination, authorization
and evaluation shall, at the option of the person claiming indemnification, be
made by special legal counsel agreed upon by the Board of Directors and such
person. Special legal counsel selected to make determinations under this Section
7.04 may be counsel for the corporation. The termination of a proceeding by
judgment, order, settlement,
<PAGE>
conviction, or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that a director or officer acted in such a manner as
to make such director or officer ineligible for indemnification.
7.05 Definition of Director and Officer. For the purposes of
this Article VII, every reference to a director and officer shall include,
without limitation, (i) every director and officer of the corporation, (ii) an
individual who, while a director or officer, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, (iii) an individual who
formerly was a director or officer of the corporation or occupied any of the
other positions referred to in clause (ii) of this Section 7.05, and (iv) the
estate, personal representative, heirs, executors and administrators of a
director or officer of the corporation or other person referred to herein.
Service as a director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise controlled by the corporation shall be deemed
service at the request of the corporation. A director or officer shall be deemed
to be serving an employee benefit plan at the corporation's request if such
director's or officer's duties to the corporation also impose duties on, or
otherwise involve services by, such director or officer to the plan or to
participants in or beneficiaries of the plan.
7.06 Indemnification of Other Persons. The corporation may, to a
lesser extent or to the same extent that it is required to provide
indemnification and make advances and reimbursements for expenses to its
directors and officers pursuant to Sections 7.02 through 7.05 of this Article
VII, provide indemnification and make advances and reimbursements for expenses
to its employees and agents and any person servicing any other entity in any
capacity at the request of the corporation, and may contract in advance to do
so.
7.07 Additional Indemnification. Indemnification pursuant to
this Article VII shall not be exclusive of any other right of indemnification to
which any person may be entitled, including indemnification pursuant to a valid
contract, indemnification by legal entities other than the corporation and
indemnification under policies of insurance purchased and maintained by the
corporation or others. No person shall be entitled to indemnification by the
corporation, however, to the extent such person is actually indemnified by
another entity, including an insurer. In addition to any insurance which may be
maintained on behalf of any director, officer or other person, the corporation
is authorized to purchase and maintain insurance against any liability it may
have under this Article VII to protect any of the persons named above against
any liability arising from their service to the corporation or any other entity
at the corporation's request, regardless of the corporation's power to indemnify
against such liability. The provisions of this Article VII shall not be deemed
to preclude the corporation from entering into contracts otherwise permitted by
law with any individuals or entities other than those named in this Article VII.
7.08 Applicability. The provisions of this Article VII shall be
applicable from and after its adoption even though some or all of the underlying
conduct or events relating to a proceeding may have occurred before such
adoption. No amendment, modification or repeal of this Article VII shall
diminish the rights provided hereunder to any person arising from conduct or
events occurring before the adoption of such amendment, modification or repeal.
If any provision of this Article VII or its application to any person or
circumstance is held invalid by a court of competent jurisdiction, the
invalidity shall not affect other provisions or applications of this Article
VII, and to this end the provisions of this Article VII are severable.
2
Exhibit 99.2
Sections 13.1-692.1, 13.1-697, 13.1-698, 13.1-702, 13.1-703 and
13.1-704 of the Virginia Stock Corporation Act, which governs the Registrant.
Such sections provide as follows:
13.1-692 LIABILITY FOR UNLAWFUL DISTRIBUTIONS.-A. Unless he complies
with the applicable standards of conduct described in ss. 13.1-690, a director
who votes for or assents to a distribution made in violation of this chapter or
the articles of incorporation is personally liable to the corporation and its
creditors for the amount of the distribution that exceeds what could have been
distributed without violating this chapter or the articles of incorporation.
B. A director held liable for an unlawful distribution under subsection
A of this section is entitled to contribution:
1. From every other director who voted for or assented to the
distribution without complying with the applicable standards of conduct
described in ss. 13.1-690; and
2. From the shareholders who received the unlawful distribution in
proportion to the amounts of such unlawful distribution received by them
respectively.
C. No suit shall be brought against any director for any liability
imposed by this section except within two years after the right of action shall
accrue.
13.1-697 AUTHORITY TO INDEMNIFY.-A. Except as provided in subsection D
of this section, a corporation may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in the
proceeding if:
1. He conducted himself in good faith; and
2. He believed:
a. In the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests; and
b. In all other cases, that his conduct was at least not opposed to its
best interests; and
3. In the case of any criminal proceeding, he had no reasonable cause
to believe his conduct was unlawful.
B. A director's conduct with respect to an employee benefit plan for a
purpose he believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of paragraph
2b of subsection A of this section.
C. The termination of a proceeding by judgment, order, settlement or
conviction is not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
D. A corporation may not indemnify a director under this section:
1. In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
2. In connection with any other proceeding charging improper personal
benefit to him, whether or not involving action in his official capacity, in
which he was adjudged liable on the basis that personal benefit was improperly
received by him.
E. Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
13.1-698 MANDATORY INDEMNIFICATION.-Unless limited by its articles of
incorporation, a corporation shall indemnify a director who entirely prevails in
the defense of any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
13.1-702 INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS.- Unless
limited by a corporation's articles of incorporation,
<PAGE>
1. An officer of the corporation is entitled to mandatory
indemnification under ss. 13.1-698, and is entitled to apply for court-ordered
indemnification under ss. 13.1-700, in each case to the same extent as a
director; and
2. The corporation may indemnify and advance expenses under this
article to an officer, employee, or agent of the corporation to the same extent
as to a director.
13.1-703 INSURANCE.-A corporation may purchase and maintain insurance
on behalf of an individual who is or was a director, officer, employee, or agent
of the corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer, employee, or agent,
whether or not the corporation would have power to indemnify him against the
same liability under ss. 13.1-697 or ss. 13.1-698.
13.1-704 APPLICATION OF ARTICLE.-A. Unless the articles of
incorporation or bylaws expressly provide otherwise, any authorization of
indemnification in the articles of incorporation or bylaws shall not be deemed
to prevent the corporation from providing the indemnity permitted or mandated by
this article.
B. Any corporation shall have power to make any further indemnity,
including indemnity with respect to a proceeding by or in the right of the
corporation, and to make additional provision for advances and reimbursement of
expenses, to any director, officer, employee or agent that may be authorized by
the articles of incorporation or any bylaw made by the shareholders or any
resolution adopted, before or after the event, by the shareholders, except an
indemnity against (i) his willful misconduct, or (ii) a knowing violation of the
criminal law. Unless the articles of incorporation, or any such bylaw or
resolution expressly provide otherwise, any determination as to the right to any
further indemnity shall be made in accordance with ss. 13.1-701B. Each such
indemnity may continue as to a person who has ceased to have the capacity
referred to above and may inure to the benefit of the heirs, executors and
administrators of such a person.
C. No right provided to any person pursuant to this section may be
reduced or eliminated by any amendment of the articles of incorporation or
bylaws with respect to any act or omission occurring before such amendment.
(Last amended by Ch. 561, L. '88, eff. 7-1-88.)
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