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As filed with the Securities and Exchange Commission on July 17, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WIND RIVER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-287339
(State of Incorporation) (I.R.S. Employer Identification No.)
1010 ATLANTIC AVENUE
ALAMEDA, CA 94501
(510) 748-4100
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
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RICHARD W. KRABER
VICE PRESIDENT OF FINANCE AND CHIEF FINANCIAL OFFICER
WIND RIVER SYSTEMS, INC.
1010 ATLANTIC AVENUE
ALAMEDA, CA 94501
(510) 748-4100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
ALAN C. MENDELSON, ESQ.
ANDREA VACHSS, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306
(650) 843-5000
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box./X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Class of Amount to be Offering Aggregate Amount of
Securities to be Registered Registered Price per Share (1) Offering Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, par value 226,211 $33.41 $7,557,710 $2,230
$.001 per share
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(1) Estimated solely for the purpose of calculating the registration fee
based on the average of the high and low sales prices of the Common Stock on
the Nasdaq National Market on July 14, 1998.
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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SUBJECT TO COMPLETION, DATED JULY 17, 1998
PROSPECTUS
226,211 SHARES
WIND RIVER SYSTEMS, INC.
COMMON STOCK
This Prospectus covers the resale from time to time by the holders (the
"Selling Stockholders") of up to 226,211 shares (the "Shares") of Common
Stock, par value $.001 ("Common Stock"), of Wind River Systems, Inc., a
Delaware corporation ("Wind River" or the "Company"). The Selling
Stockholders acquired the Shares on May 18, 1998 in connection with the
Company's acquisition of Zinc Software Incorporated, in a transaction exempt
from registration under the Securities Act of 1933, as amended (the
"Securities Act").
The Selling Stockholders, directly or through agents, broker-dealers or
underwriters, may sell the Shares offered hereby from time to time on terms to
be determined at the time of sale in transactions on the Nasdaq National
Market or in privately negotiated transactions or in a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions
or commissions from the Selling Stockholders or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principal or both (which compensation to a particular broker-dealer may be in
excess of customary commissions). The Company will not receive any proceeds
from the sale of Common Stock by the Selling Stockholders. The aggregate
proceeds to the Selling Stockholders from the Common Stock will be the price
of the Common Stock sold less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. See "Selling Stockholders" and "Plan
of Distribution."
The Common Stock is quoted on the Nasdaq National Market under the symbol
"WIND." The last reported sale price of the Common Stock on the Nasdaq
National Market on July 16, 1998 was $37.25 per share.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS
IN EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, SEE "RISK
FACTORS" COMMENCING ON PAGE 4.
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THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Expenses of preparing and filing the Registration Statement of which this
Prospectus is a part and all post-effective amendments will be borne by the
Company. No underwriting commissions or discounts will be paid by the Company
in connection with this offering. Estimated expenses payable by the Company in
connection with this offering are approximately $26,000. The Company has
agreed to indemnify the Selling Stockholders, and the Selling Stockholders
have agreed to indemnify the Company, against certain liabilities, including
liabilities under the Securities Act.
The Selling Stockholders and any agents, broker-dealers or underwriters
that participate in the distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Common Stock may be
deemed to be underwriting discounts or commissions under the Securities Act.
July 17, 1998
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices located at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
Reports, proxy statements and other information filed electronically by the
Company with the Commission are available at the Commission's worldwide web
site at http://www.sec.gov. The Company's Common Stock is listed for trading
on the Nasdaq National Market and reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
National Association of Securities Dealers, 1735 K Street, N.W., Washington,
D.C. 20006.
ADDITIONAL INFORMATION
A registration statement on Form S-3 with respect to the Shares offered
hereby (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") has been filed with the Commission under the
Securities Act. This Prospectus does not contain all of the information
contained in such Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. For further
information with respect to the Company and the Shares offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus regarding the contents of any contract or any other documents are
not necessarily complete and, in each instance, reference is hereby made to
the copy of such contract or document filed as an exhibit to the Registration
Statement. The Registration Statement may be inspected without charge at the
Securities and Exchange Commission's principal office in Washington, D.C., and
copies of all or any part thereof may be obtained from the Public Reference
Section, Securities and Exchange Commission, Washington, D.C. 20549, upon
payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 30, 1998;
3. The Company's Current Reports on Form 8-K dated January 13, 1998 and
February 6, 1998; and
4. The description of the Company's Common Stock set forth in its
Registration Statement on Form 8-A filed with the Commission on
March 12, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing such
documents. 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 Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the request of
such person, a copy of any or all of the documents incorporated herein
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by reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
documents should be directed to Wind River Systems, Inc., Attention: Chief
Financial Officer, 1010 Atlantic Avenue, Alameda, California 94501, telephone
(510) 748-4100.
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FORWARD LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. WHEN USED IN THIS PROSPECTUS, THE WORDS "ANTICIPATE,"
"BELIEVE," "ESTIMATE," AND "EXPECT" AND SIMILAR EXPRESSIONS AS THEY RELATE TO
THE COMPANY OR ITS MANAGEMENT ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. THE COMPANY'S ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS COULD
DIFFER MATERIALLY FROM THE RESULTS EXPRESSED IN, OR IMPLIED BY, THESE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE THOSE DISCUSSED BELOW UNDER THE CAPTION "RISK FACTORS" AND
IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
THE COMPANY
Wind River Systems, Inc. ("Wind River" or the "Company") develops,
markets and supports advanced software operating systems and development tools
that allow customers to create complex, robust, real-time software
applications for embedded computers. An embedded computer is a microprocessor
that is incorporated into a larger device and is dedicated to responding to
external events by performing specific tasks quickly, predictably and
reliably. Some examples of such devices are telecommunications products such
as PABX, routers, central office switches and call processing systems; office
products such as fax machines, laser printers and photocopiers; vehicle
anti-lock brakes and navigation systems; consumer products such as camcorders,
video games and set-top boxes; medical instrumentation and imaging systems;
industrial automation equipment such as robots; and aerospace devices such as
NASA's Mars probe, Pathfinder. Wind River's flagship product, Tornado-TM-,
enables customers to enhance product performance, standardize designs across
projects, reduce research and development costs and shorten product
development cycles. The Company's principal offices are located at 1010
Atlantic Avenue, Alameda, California 94501 and its telephone number is (510)
748-4100.
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN EVALUATING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY.
FLUCTUATIONS IN OPERATING RESULTS
The Company has experienced from time to time significant
period-to-period fluctuations in revenues and operating results and
anticipates that such fluctuations will occur in the future. These
fluctuations may be attributable to a number of factors, including the volume
and timing of orders received during the quarter, the timing and acceptance of
new products and product enhancements by the Company or its competitors,
unanticipated sales and buyouts of run-time licenses, stages of product life
cycles, purchasing patterns of customers and distributors, market acceptance
of products sold by the Company's customers, competitive conditions in the
industry, business cycles affecting the markets in which the Company's
products are sold, extraordinary events, such as acquisitions, including
related charges, and economic conditions generally or in specific geographic
areas. The future operating results of the Company may fluctuate as a result
of these and other factors, including the Company's ability to continue to
develop innovative and competitive products. In addition, the Company
generally does not enter into long-term agreements with its customers, and the
timing of license fees is difficult to predict. The procurement process of the
Company's customers is often several months or longer from initial inquiry to
order and may involve competing considerations. Further, as licensing of the
Company's products increasingly becomes a more strategic decision made at
higher management levels, there can be no assurance that sales cycles for the
Company's product will not lengthen. Product revenue in any quarter depends
primarily on the volume and timing of orders received in that quarter. The
Company has at times recognized a substantial portion of its total revenue
from sales booked and shipped in the latter part of the quarter; thus, the
magnitude of quarterly fluctuations may not become evident until late in a
particular quarter. Because the Company's staffing and operating expenses are
based on anticipated total revenue levels, and a high percentage of the
Company's costs are fixed in the short term, small variations between
anticipated orders and actual orders, as well as non-recurring or large
orders, could cause disproportionate variations in the Company's operating
results from quarter to quarter. Revenues also are typically higher in the
fourth quarter than in other quarters of the fiscal year, which ends on
January 31, primarily as a result of purchases by customers
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prior to the calendar year end, as well as by customers who purchase at the
commencement of a new calendar year. These trends are expected to continue.
Because the software industry is intensely competitive, software vendors
have from time to time experienced price erosion on their products. As is
typical in the software industry, the Company's fixed costs as a percentage of
revenues are high, and significant price erosion could have a material adverse
effect on the Company's revenues and operating results. A number of
additional factors may in the future cause the Company's revenues and
operating results to vary significantly from period to period. These factors
include: software "bugs" or other product quality problems; changes in
operating expenses; changes in Company strategy; personnel changes; foreign
currency exchange rates; and mix of products sold. Although the Company has
been profitable for the last several years on an annual basis, there can be no
assurance that the Company will be able to continue its growth in revenue or
sustain its profitability on a quarterly or annual basis. Due to all of the
foregoing factors, the Company believes that period-to-period comparisons of
its results of operations are not necessarily meaningful and should not be
relied upon as an indication of future performance. It is possible that, in
some future quarters, the Company's operating results will be below the
expectations of stock market analysts and investors. In such event, the price
of the Common Stock could be materially and adversely affected.
RELIANCE ON CORE FAMILY OF PRODUCTS
Revenue from sales of the Tornado-TM- and VxWorks-Registered Trademark-
family of products and services accounted for a significant majority of the
Company's revenues in the fiscal year ended January 31, 1998, and the three
months ended April 30, 1998, respectively. The Company's future results depend
heavily on continued market acceptance of these products in the Company's
current markets and successful application in new markets. Any factor
adversely affecting the market for the Tornado and VxWorks family of products
and services could have a material adverse affect on the Company's business,
financial condition and results of operations. The Company typically charges a
one-time fee for a development license and a run-time license fee for each
copy of the Company's operating system embedded in the customer's products. A
key component of the Company's strategy is to increase revenue through
run-time license fees. Any increase in the percentage of revenues attributable
to run-time licenses will depend on the Company's successful negotiation of
run-time license agreements and on the successful commercialization by the
Company's customers of the underlying products. To the extent that such
customers are not successful, the Company may not be able to meet its
objectives, and its business, financial condition and results of operations
could be materially and adversely affected.
COMPETITION
The embedded real-time software industry is highly competitive and is
characterized by rapidly advancing technology. In order to maintain or
improve its position in the industry, the Company must continue to enhance its
current products and rapidly develop new products and product extensions. The
Company believes that its principal competition comes from companies that
develop real-time embedded software development systems in-house rather than
purchasing such systems from independent software vendors such as the Company.
Many of these organizations have substantial internal programming resources
with the capability to develop specific products for their needs. The Company
also competes with other independent software vendors, including Integrated
Systems, Inc., Mentor Graphics, Inc. (through its acquisition of
Microtec/Ready Systems), Microware Systems Corporation, and Microsoft
Corporation. In addition, hardware or other software vendors could seek to
expand their product offerings by designing and selling products that directly
compete with or adversely affect sales of the Company's products. Many of the
Company's existing and potential competitors have substantially greater
financial, technical, marketing and sales resources than the Company. As a
result, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the development, promotion, sale and support of their products
than the Company. Furthermore, current and potential competitors have
established or may establish cooperative relationships among themselves or
with third parties. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. In addition, the Company is aware of ongoing efforts by competitors to
emulate the performance and features of the Company's products, and there can
be no assurance that competitors will not develop equivalent or superior
technology to that of the Company. Because a substantial percentage of the
Company's revenues has been derived from sales of the Tornado and VxWorks
family of products and services, the effects of competition could be more
adverse than would be the case if the Company had a broader product offering.
In addition, competitive pressures could cause the Company to reduce the
prices of its products, which would result in reduced profit margins. There
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can be no assurance that the Company will be able to compete effectively
against its current and future competitors. If the Company is unable to
compete successfully, its business, financial condition and results of
operations would be materially and adversely affected.
RISKS ASSOCIATED WITH NEW AND CHANGING MARKETS
The Company is continuously engaged in product development for new or
changing markets. In particular, the Company has invested significant time
and effort, together with a consortium of industry participants, in the
development of I2O, a new specification that is intended to create an open
standard set of interface specifications for high performance I/O systems. The
specification is intended to be used by system, network and peripheral
interface card and operating systems vendors to simplify the task of building
and maintaining high-performance I/O subsystems. The Company also has
developed IxWorks, a real-time operating system for use in conjunction with
the I2O specification. The success of the I2O specification and the IxWorks
product line depends heavily on its adoption by a broad segment of the
industry. The Company also has expended, and continues to expend, substantial
time and financial resources to develop embedded operating software and
development tools for Internet applications. The commercial Internet market
has only recently begun to develop, is rapidly changing and is characterized
by an increasing number of new entrants with competitive products. Moreover,
there is an increasing number of new Internet protocols to which the Company's
products must be ported. It is unclear which of these competing protocols
ultimately will achieve market acceptance. If the protocols upon which the
Company's Internet products are based ultimately fail to be widely adopted,
the Company's business, financial condition and results of operations may be
materially and adversely affected. It is difficult to predict with any
assurance whether demand for any of these products will develop or increase in
the future. If these markets, or any other new market targeted by the Company
in the future, fail to develop, develop more slowly than anticipated or become
saturated with competitors, if the Company's products are not developed in a
timely manner, or if the Company's products and services do not achieve or
sustain market acceptance, the Company's business, financial condition and
results of operations would be materially and adversely affected.
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS
The embedded real-time software industry faces a fragmented market
characterized by ongoing technological developments, evolving industry
standards and rapid changes in customer requirements. The introduction of
products embodying new technologies and the emergence of new industry
standards could render the Company's existing products obsolete and
unmarketable. The Company's success depends and will continue to depend upon
its ability to continue to develop and introduce in a timely manner new
products, including new releases, applications and enhancements, that take
advantage of technological advances, to identify and adhere to emerging
standards, to continue to improve the functionality of its Tornado development
environment and the scalability and functionality of the VxWorks operating
system, to offer its products across a spectrum of microprocessor families
used in the embedded systems market and to respond promptly to customers'
requirements. The Company has from time to time experienced delays in the
development of new products and the enhancement of existing products. Such
delays are commonplace in the software industry. There can be no assurance
that the Company will be successful in developing and marketing, on a timely
basis or at all, competitive products, product enhancements and new products
that respond to technological change, changes in customer requirements and
emerging industry standards, or that the Company's enhanced or new products
will adequately address the changing needs of the marketplace. The inability
of the Company, due to resource constraints or technological or other reasons,
to develop and introduce new products or product enhancements in a timely
manner could have a material adverse effect on the Company's business,
financial condition or results of operations.
From time to time, the Company or its competitors may announce new
products, capabilities or technologies that have the potential to replace or
shorten the life cycles of the Company's existing products. There can be no
assurance that announcements of currently planned or other new products by the
Company or others will not cause customers to defer purchasing existing
Company products. Any failure by the Company to anticipate or respond
adequately to changing market conditions, or any significant delays in product
development or introduction, would have a material adverse effect on the
Company's business, financial condition and results of operations.
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DEPENDENCE ON VME MARKET
A significant amount of the Company's revenues historically has been
derived from sales of systems built to the VME (versabus module eurocard)
standard. These systems typically are used in high cost, low volume
applications, including military, telecommunications, space and research
applications. Although the Company believes that revenues from sales of
products designed for embedded systems applications will account for an
increasing percentage of the Company's revenues in the future, the Company
expects revenues from the VME market to continue to be significant for the
foreseeable future. Academic institutions and defense industry participants,
which generate a significant portion of the Company's VME revenues, are
dependent on government funding, the continued availability of which is
uncertain. Although the Company's VME customers typically have received
government funding prior to placing its product orders with Wind River, any
unanticipated future termination of government funding of VME customers could
have a material adverse effect on the Company's business, financial condition
and results of operations.
MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL
PERSONNEL
The Company has experienced, and expects to continue to experience,
significant growth in the number of employees, the scope and complexity of its
operations and financial systems and the geographic area of its operations.
The Company's continued success will depend significantly on its ability to
integrate new operations and new personnel. The Company's ability to manage
future expansion of its operations, if any, will require the Company to
continue to improve its financial and management controls, reporting systems
and procedures on a timely basis and expand, train and manage its employee
work force efficiently. There can be no assurance that the Company will be
able to do so successfully. The Company's failure to do so could have a
material adverse effect on the Company's business, operating results and
financial condition. In addition, the Company anticipates the need to relocate
its management, product development, marketing, sales, customer support and
operations functions to a new facility within the next year. During fiscal
1998, the Company purchased real property in the City of Alameda, California
for $11.4 million. The property is being developed to construct the Company's
new headquarters facility. There can be no assurance that any such relocation
will be accomplished efficiently, or that the Company's operations will not be
materially and adversely affected by such relocation. The Company's future
performance depends to a significant degree upon the continued contributions
of its key management, product development, marketing, sales, customer support
and operations personnel, several of whom have joined the Company only
recently. In addition, the Company believes its future success will depend in
large part upon its ability to attract and retain highly-skilled managerial,
product development, marketing, sales, customer support and operations
personnel, many of whom are in great demand. Competition for such personnel is
particularly intense in the San Francisco Bay Area, where the Company is
headquartered, and there can be no assurance that the Company will be
successful in attracting and retaining such personnel. The failure of the
Company to attract, integrate and retain the necessary personnel could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISKS ASSOCIATED WITH ACQUISITIONS
As part of its business strategy, the Company has recently completed the
acquisitions of Objective Software Technology, Ltd. and Zinc Software
Incorporated, has acquired equity interests in Emultek, Ltd. and 3Soft GmbH
and has also licensed certain technologies from Network Computer, Inc. The
Company expects to make additional acquisitions of, or significant investments
in, businesses that offer complementary products, services and technologies.
Any acquisitions or investments will be accompanied by the risks commonly
encountered in acquisitions of businesses and technologies including, among
other things, the difficulty of assimilating the operations and personnel of
the acquired businesses, the potential disruption of the Company's ongoing
business, the inability to integrate acquired technologies into new and
existing products, the inability of management to maximize the financial and
strategic position of the Company, the maintenance of uniform standards,
controls, procedures and policies and the impairment of relationships with
employees and customers as a result of any integration of new management
personnel. These factors could have a material adverse effect on the Company's
business, results of operations or financial condition. Consideration paid for
future acquisitions, if any, could be in the form of cash, stock, debt, rights
to purchase stock or a combination thereof. Dilution to existing stockholders
and to earnings per share may result to the extent that shares of stock or
other rights to purchase stock are issued in connection with any such future
acquisitions.
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RISKS OF PRODUCT DEFECTS; PRODUCT AND OTHER LIABILITY
As a result of their complexity, software products may contain undetected
errors or compatibility issues, particularly when first introduced or as new
versions are released. There can be no assurance that, despite testing by the
Company and testing and use by current and potential customers, errors will
not be found in new products after commencement of commercial shipments. The
occurrence of such errors could result in loss of or delay in market
acceptance of the Company's products, which could have a material adverse
effect on the Company's business, financial condition and results of
operations. The increasing use of the Company's products for applications in
systems that interact directly with the general public, particularly
applications in transportation, medical systems and other markets where the
failure of the embedded system could cause substantial property damage or
personal injury, could expose the Company to significant product liability
claims. In addition, the Company's products may be used for applications in
mission-critical business systems where the failure of the embedded system
could be linked to substantial economic loss. Although the Company has not
experienced material adverse effects resulting from any such errors to date,
there can be no assurance that, despite testing by the Company and testing and
use by current and potential customers, errors will not be found in new
products after commencement of commercial shipments, resulting in loss of or
delay in market acceptance, which could have a material adverse effect upon
the Company's business, operating results and financial condition. Although
the Company's license and other agreements with its customers typically
contain provisions designed to limit the Company's exposure to potential
product liability and other claims, these provisions may not be effective in
all circumstances and in all jurisdictions. Although the Company has not
experienced any product liability or economic loss claims to date, the sale
and support of the Company's products entails the risk of such claims. The
Company carries insurance against product liability risks and errors or
omissions coverage, although there can be no assurance that such insurance
will continue to be available to the Company on commercially reasonable terms
or at all. A product liability claim or claim for economic loss brought
against the Company in excess of or outside the limits of its insurance
coverage, or a product recall involving the Company's software, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
During the fiscal years ended January 31, 1996, 1997 and 1998, the
Company derived approximately 37%, 34%, and 29%, respectively, of its total
revenue from sales outside of North America. The Company expects that
international sales will continue to generate a significant percentage of its
total revenue in the foreseeable future. The Company also expects to make
substantial investments to expand further its international operations and to
increase its direct sales force in Europe and Asia. There can be no assurance
that these investments will result in commensurate increases in the Company's
international sales. International operations are subject to certain risks,
including foreign government regulation; more prevalent software piracy;
longer payment cycles; unexpected changes in, or imposition of, regulatory
requirements, tariffs, import and export restrictions and other barriers and
restrictions; greater difficulty in accounts receivable collection;
potentially adverse tax consequences including restrictions on repatriation of
earnings; the burdens of complying with a variety of foreign laws; staffing
and managing foreign operations; political and economic instability; changes
in diplomatic and trade relationships; possible recessionary environments in
economies outside the United States; and other factors beyond the control of
the Company. There can be no assurance that such factors will not have a
material adverse effect on the Company's international sales and consequently,
the Company's business, operating results and financial condition. Sales by
the Company's foreign subsidiaries are denominated in the local currency, and
an increase in the relative value of the dollar against such currencies would
reduce the Company's revenues in dollar terms or make the Company's products
more expensive and, therefore, potentially less competitive in foreign
markets. There can be no assurance that the Company's future results of
operations will not be adversely affected by currency fluctuations. The
Company relies on distributors for sales of its products in certain foreign
countries and, accordingly, is dependent on their ability to promote and
support the Company's products and, in some cases, to translate them into
foreign languages. The Company's international distributors generally offer
products of several different companies, including in some cases products that
are competitive with the Company's products, and such distributors are not
subject to any minimum purchase or resale requirements. There can be no
assurance that the Company's international distributors will continue to
purchase the Company's products or provide them with adequate levels of
support. Any changes in the relationships the Company has with its
international distributors may have a material adverse effect on the Company's
business, operating results and financial condition.
8
<PAGE>
LIMITED PROTECTION OF PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT
The Company's success is heavily dependent upon its proprietary
technology. To protect its proprietary rights, the Company relies on a
combination of copyright, trade secret, patent and trademark laws,
nondisclosure and other contractual restrictions on copying, distribution and
technical measures. The Company seeks to protect its software, documentation
and other written materials through trade secret and copyright laws, which
provide only limited protection. In addition, the Company has two United
States patent applications pending. There can be no assurance that patents
will issue from the Company's pending applications or that any claims allowed
will be of sufficient scope or strength (or be issued in all countries where
the Company's products can be sold) to provide meaningful protection or any
commercial advantage to the Company. As a part of its confidentiality
procedures, the Company generally enters into nondisclosure agreements with
its employees, consultants, distributors and corporate partners and limits
access to and distribution of its software, documentation and other
proprietary information. End user licenses of the Company's software are
frequently in the form of shrink wrap license agreements, which are not signed
by licensees, and therefore may be unenforceable under the laws of many
jurisdictions. Despite the Company's efforts to protect its proprietary
rights, it may be possible for unauthorized third parties to copy the
Company's products or to reverse engineer or obtain and use information that
the Company regards as proprietary. There can be no assurance that the
Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technologies. Policing
unauthorized use of the Company's products is difficult, and while the Company
is unable to determine the extent to which software piracy of its products
exists, software piracy can be expected to be a persistent problem. In
addition, effective protection of intellectual property rights may be
unavailable or limited in certain countries. The status of U.S. patent
protection in the software industry is not well defined and is likely to
evolve as the U.S. Patent and Trademark Office grants additional patents.
Patents have been granted on fundamental technologies in software, and patents
may issue in the future that relate to fundamental technologies incorporated
into the Company's products.
As the number of patents, copyrights, trademarks, trade secrets and other
intellectual property rights in the Company's industry increases, products
based on the Company's technology may increasingly become the subject of
infringement claims. The Company has received in the past and may receive in
the future letters from third parties asserting infringement claims against
the Company. There can be no assurance that third parties will not assert
infringement claims against the Company in the future. Any such claims,
whether with or without merit, could be time consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company, or at all,
which could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company may
initiate claims or litigation against third parties for infringement of the
Company's proprietary rights or to establish the validity of the Company's
proprietary rights. Litigation to determine the validity of any claims,
whether or not such litigation is determined in favor of the Company, could
result in significant expense to the Company and divert the efforts of the
Company's technical and management personnel from productive tasks. In the
event of an adverse ruling in any such litigation, the Company might be
required to pay substantial damages, discontinue the use and sale of
infringing products, expend significant resources to develop non-infringing
technology or obtain licenses to infringing technology.
LEVERAGE
In connection with the sale of Convertible Subordinated Notes in fiscal
1998, the Company incurred $140 million in debt which resulted in an increase
in its ratio of long-term debt to total capitalization. As a result of this
additional indebtedness, the Company's principal and interest obligations have
increased substantially. The degree to which the Company will be leveraged
could materially and adversely affect the Company's ability to obtain
financing for working capital, acquisitions or other purposes and could make
it more vulnerable to industry downturns and competitive pressures. The
Company's ability to meet its debt service obligations will be dependent upon
the Company's future performance, which will be subject to financial, business
and other factors affecting operations of the Company, many of which are
beyond its control.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has fluctuated in the
past, and is likely to fluctuate in the future. The Company believes that
various factors, including quarterly fluctuations in results of operations,
announcements of new products by the Company or by its competitors, and
changes in the software industry in
9
<PAGE>
general may significantly affect the market price of the Common Stock. In
addition, in recent years the stock market in general, and the shares of
technology companies in particular, have experienced extreme price
fluctuations. This volatility has had a substantial effect on the market
prices of securities issued by the Company and other high technology
companies, often for reasons unrelated to the operating performance of the
specific companies. The market prices of many high technology companies'
stocks are at or near their historical highs and reflect price/earning ratios
substantially above historical norms. There can be no assurance that the
market price of the Common Stock will remain at or near its current level. In
the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted
against that company. Such litigation, if instituted against the Company,
could result in substantial costs and a diversion of management attention and
resources, which would have a material adverse effect on the Company's
business, financial condition and results of operation, even if the Company is
successful in such suits. These market fluctuations, as well as general
economic, political and market conditions such as recessions, may adversely
affect the market price of the Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders in the offering.
10
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders and
the number of shares of Common Stock owned by each of them as of June 30, 1998
which may be offered pursuant to this Prospectus. This information is based upon
information provided by Selling Stockholders. Because the Selling Stockholders
may offer all, some or none of their Common Stock, no definitive estimate as to
the number of shares thereof that will be held by the Selling Stockholders after
such offering can be provided.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING(1) SHARES BEING AFTER OFFERING
-------------------- ------------ -------------------
NAME NUMBER PERCENT(2) OFFERED NUMBER PERCENT
---- ------ ---------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Joseph Bishop 3,798 * 3,798 -0- -
Robert Bishop 95,795 * 95,795 -0- -
Steve Bishop 22,792 * 22,792 -0- -
Estate of John
Christensen(3) 8,782 * 8,782 -0- -
Laird Foshay 6,353 * 6,353 -0- -
Leonard Grover 7,596 * 7,596 -0- -
Mark Hurst 7,596 * 7,596 -0- -
Paul Leathers 13,173 * 13,173 -0- -
Larry Macfarlane(4) 26,127 * 26,127 -0- -
Bruce Miller 8,782 * 8,782 -0- -
Richard Paulsen 20,419 * 20,419 -0- -
Michael Redd 4,998 * 4,998 -0- -
</TABLE>
______________
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the Rules of
the SEC and generally includes voting or investment power with respect to
securities. Except as otherwise indicated by footnote, and subject to
community property laws where applicable, the persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Based on 26,303,086 shares of Common Stock outstanding net of
treasury shares on July 13, 1998.
(3) By Karen P. Christensen, Administrator in Intestacy.
(4) Mr. Macfarlane is President and a director of Zinc Software
Incorporated, a wholly-owned subsidiary of the Company.
11
<PAGE>
PLAN OF DISTRIBUTION
The shares of Common Stock offered by the Selling Stockholders may be sold
from time to time to purchasers directly by each of the Selling Stockholders
acting as principal for its own account or through underwriters, dealers or
agents who may receive compensation in the form of underwriting discounts,
commissions or concessions from the Selling Stockholders and/or the purchasers
of shares for whom they may act as agent. Sales may be made on the Nasdaq
National Market or in private transactions or in a combination of such methods
of sale, at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. In addition to sales of Common Stock pursuant to the
Registration Statement of which this Prospectus is a part, the Selling
Stockholders may sell such Common Stock in compliance with Rule 144 promulgated
under the Securities Act.
The Selling Stockholders and any underwriters, dealers or agents that
participate in the distribution of the Common Stock offered hereby may be deemed
to be underwriters within the meaning of the Act and any discounts, commissions
or concessions received by them and any provided pursuant to the sale of shares
by them might be deemed to be underwriting discounts and commissions under the
Act.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with.
The Shares were originally issued to the Selling Stockholders pursuant to
an exemption from the registration requirements of the Securities Act provided
by Section 4(2) thereof. The Company agreed to register the Shares under the
Securities Act and to indemnify and hold the Selling Stockholders harmless
against certain liabilities under the Securities Act that could arise in
connection with the sale by the Selling Stockholders of the Shares. The Company
has agreed to pay all reasonable fees and expenses incident to the filing of
this Registration Statement.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Cooley
Godward LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Wind River Systems, Inc. for the
year ended January 31, 1998, have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
12
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such other information and representations
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer or solicitation by anyone in any state
in which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. The delivery of this
Prospectus at any time does not imply that the information herein is correct as
of any time subsequent to the date hereof.
TABLE OF CONTENTS
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee.
<TABLE>
<CAPTION>
<S> <C>
Registration fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,230
------
Nasdaq listing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,525
------
Printing expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000
------
Legal fees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . $15,000
------
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . $2,500
------
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 745
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,000
------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended ("Securities Act"). The Registrant's Bylaws also provide
that the Registrant will indemnify its directors and executive officers and may
indemnify its other officers, employees and other agents to the fullest extent
permitted by Delaware law.
The Registrant's Restated Certificate of Incorporation ("Restated
Certificate") provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
The Registrant has entered into agreements with its directors and officers
that require the Company to indemnify such persons to the fullest extent
authorized or permitted by the provisions of the Restated Certificate and
Delaware law against expenses, judgements, fines, settlements and other amounts
actually and responsibly incurred (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any such
person may be made a party by reason of the fact that such person is or was a
director, officer, employee or other agent of the Registrant or any of its
affiliated enterprise. Delaware law permits such indemnification, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interest of the Registrant and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain procedures
that will apply in the event of a claim for indemnification thereunder.
II-1
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------
<S> <C>
5.1 Opinion of Cooley Godward LLP
10.1 1998 Equity Incentive Plan
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Cooley Godward LLP (Included in Exhibit 5.1)
24.1 Power of Attorney. Reference is made to page II-3.
</TABLE>
__________________
(B) SCHEDULES.
ITEM 17. 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; 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 (i) and (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 (i) and
(ii) 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 which remain unsold at the termination of the
offering.
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 Securities and Exchange 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 payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
II-2
<PAGE>
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.
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 undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b) (1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Alameda, State of California, on the 17th day of
July, 1998.
WIND RIVER SYSTEMS, INC.
By: /s/ Ronald A. Abelmann
----------------------------
Ronald A. Abelmann
Chief Executive Officer, President and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ronald A. Abelmann and Richard W. Kraber,
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments and registration statements filed pursuant
to Rule 462) 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, 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 connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Ronald A. Abelmann Chief Executive Officer, President and Director July 17, 1998
- --------------------------- (PRINCIPAL EXECUTIVE OFFICER)
Ronald A. Abelmann
/s/ Richard W. Kraber Chief Financial Officer (PRINCIPAL July 17, 1998
- --------------------------- FINANCIAL AND ACCOUNTING OFFICER)
Richard W. Kraber
/s/ Jerry L. Fiddler Chairman of the Board July 17, 1998
- ---------------------------
Jerry L. Fiddler
/s/ David N. Wilner Director and Chief Technical Officer July 17, 1998
- ---------------------------
David N. Wilner
/s/ William B. Elmore Director July 17, 1998
- ---------------------------
William B. Elmore
/s/ David B. Pratt Director July 17, 1998
- ---------------------------
David B. Pratt
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT Page No.
- ---------
<S> <C> <C>
5.1 Opinion of Cooley Godward LLP
10.1 1998 Equity Incentive Plan
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Cooley Godward LLP (Included in Exhibit 5.1)
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
II-5
<PAGE>
EXHIBIT 5.1
July 17, 1998
Wind River Systems, Inc.
1010 Atlantic Avenue
Alameda, CA 94501
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Wind River Systems., Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 226,211 shares of the
Company's Common Stock, $.001 par value, (the "Shares").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation and By-laws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement and related Prospectus, will be validly issued, fully paid, and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Alan C. Mendelson
-----------------------
Alan C. Mendelson, Esq.
<PAGE>
EXHIBIT 10.1
WIND RIVER SYSTEMS, INC.
1998 EQUITY INCENTIVE PLAN
ADOPTED APRIL 23, 1998
APPROVED BY STOCKHOLDERS JUNE 25, 1998
TERMINATION DATE: APRIL 22, 2008
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock appreciation rights, (iv) stock bonuses and (v) rights to
acquire restricted stock.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c).
(e) "COMMON STOCK" means the common stock of the Company.
(f) "COMPANY" means Wind River Systems, Inc., a Delaware corporation.
(g) "CONSULTANT" means any person, including an advisor, (1) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (2) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors of the Company who are not compensated
1
<PAGE>
by the Company for their services as Directors or Directors of the Company
who are merely paid a director's fee by the Company for their services as
Directors.
(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. The Participant's Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. For example, a change
in status from an Employee of the Company to a Consultant of an Affiliate or
a Director of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board of Directors of the Company.
(k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
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(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NON-EMPLOYEE DIRECTOR" means a Director of the Company who either
(i) is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant
or in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K of the
Securities and Exchange Commission ("Regulation S-K")), does not possess an
interest in any other transaction as to which disclosure would be required
under Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a "non-employee director" for
purposes of Rule 16b-3.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.
(u) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(v) "OUTSIDE DIRECTOR" means a Director of the Company who either (i)
is not a current employee of the Company or an "affiliated corporation"
(within the meaning of Treasury Regulations promulgated under Section 162(m)
of the Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the Company or an
"affiliated corporation" at any time and is not currently receiving direct or
indirect remuneration from the Company or an "affiliated corporation" for
services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.
(w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(x) "PLAN" means this Wind River Systems, Inc. 1998 Equity Incentive
Plan.
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(y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(aa) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock appreciation right, a stock bonus and a right to acquire
restricted stock.
(bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
(cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board will administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) POWERS OF BOARD. The board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; and the number of shares with
respect to which a Stock Award shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 12.
(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one or more members of the Board, and the
term "Committee"
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shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
(ii) COMMITTEE COMPOSITION. As long as the Common Stock is
publicly traded, in the discretion of the Board, a Committee may consist
solely of two or more Outside Directors, in accordance with Section 162(m) of
the Code, and/or solely of two or more Non-Employee Directors, in accordance
with Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Outside Directors, the authority to grant Stock Awards to
eligible persons who are either (a) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award or (b) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code and/or (ii) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate one million (1,000,000) shares
of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full (or vested in the case of Restricted Stock),
the stock not acquired under such Stock Award shall revert to and again
become available for issuance under the Plan. Shares subject to stock
appreciation rights exercised in accordance with the Plan shall not be
available for subsequent issuance under the Plan. If any Common Stock
acquired pursuant to the exercise of an Option shall for any reason be
repurchased by the Company under an unvested share repurchase option provided
under the Plan, the stock repurchased by the Company under such repurchase
option shall not revert to and again become available for issuance under the
Plan.
(c) SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.
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(b) TEN PERCENT STOCKHOLDERS. No Ten Percent Stockholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price
of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of the Common Stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, no employee shall be eligible
to be granted Options covering more than seven hundred fifty thousand
(750,000) shares of the Common Stock during any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option. The
provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the
Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after
the expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the
exercise price of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an exercise price lower than that
set forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.
(d) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii)
at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) by delivery to the
Company of other Common Stock, according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock) with
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the Participant or in any other form of legal consideration that may be
acceptable to the Board; provided, however, that at any time that the Company
is incorporated in Delaware, payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by
deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionee
only by the Optionee. Notwithstanding the foregoing provisions of this
subsection 6(e), the Optionee may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionee, shall thereafter be entitled to
exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionee only by the Optionee.
Notwithstanding the foregoing provisions of this subsection 6(f), the
Optionee may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable
in periodic installments which may, but need not, be equal. The Option may
be subject to such other terms and conditions on the time or times when it
may be exercised (which may be based on performance or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options may
vary. The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares as to which an Option may
be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three
(3) months following the termination of the Optionee's Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionee does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionee's Option Agreement may
also provide that if the exercise of the Option following the termination of
the Optionee's Continuous Service (other than upon the Optionee's death or
Disability) would be prohibited at any time
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solely because the issuance of shares would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in
subsection 6(a) or (ii) the expiration of a period of three (3) months after
the termination of the Optionee's Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements.
(j) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's Disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise it as of the date of termination), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following such
termination (or such longer or shorter period specified in the Option
Agreement) or (ii) the expiration of the term of the Option as set forth in
the Option Agreement. If, after termination, the Optionee does not exercise
his or her Option within the time specified herein, the Option shall
terminate.
(k) DEATH OF OPTIONEE. In the event (i) an Optionee's Continuous
Service terminates as a result of the Optionee's death or (ii) the Optionee
dies within the period (if any) specified in the Option Agreement after the
termination of the Optionee's Continuous Service for a reason other than
death, then the Option may be exercised (to the extent the Optionee was
entitled to exercise the Option as of the date of death) by the Optionee's
estate, by a person who acquired the right to exercise the Option by bequest
or inheritance or by a person designated to exercise the option upon the
Optionee's death pursuant to subsection 6(e) or 6(f), but only within the
period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in
the Option Agreement. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time before the Optionee's Continuous
Service terminates to exercise the Option as to any part or all of the shares
subject to the Option prior to the full vesting of the Option. Any unvested
shares so purchased may be subject to an unvested share repurchase option in
favor of the Company or to any other restriction the Board determines to be
appropriate.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change
from time to time, and the terms and conditions of separate stock bonus
agreements need not be identical, but each stock bonus agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:
(i) CONSIDERATION. A stock bonus shall be awarded in
consideration for past services actually rendered to the Company or for its
benefit.
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(ii) VESTING. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined
by the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may
reacquire any or all of the shares of Common Stock held by the Participant
which have not vested as of the date of termination under the terms of the
stock bonus agreement.
(iv) TRANSFERABILITY. Rights to acquire shares under the stock
bonus agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the stock bonus agreement, as the Board
shall determine in its discretion, so long as stock awarded under the stock
bonus agreement remains subject to the terms of the stock bonus agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:
(i) PURCHASE PRICE. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine
and designate in such restricted stock purchase agreement. The purchase
price shall not be less than eighty-five percent (85%) of the stock's Fair
Market Value on the date such award is made or at the time the purchase is
consummated.
(ii) CONSIDERATION. The purchase price of stock acquired
pursuant to the restricted stock purchase agreement shall be paid either:
(i) in cash at the time of purchase; (ii) at the discretion of the Board,
according to a deferred payment or other arrangement with the Participant; or
(iii) in any other form of legal consideration that may be acceptable to the
Board in its discretion; provided, however, that at any time that the Company
is incorporated in Delaware, payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by
deferred payment.
(iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock
held by the Participant which have not vested as of the date of termination
under the terms of the restricted stock purchase agreement.
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(v) TRANSFERABILITY. Rights to acquire shares under the
restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long
as stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.
(c) STOCK APPRECIATION RIGHTS.
(i) AUTHORIZED RIGHTS. The following three types of stock
appreciation rights shall be authorized for issuance under the Plan:
(1) TANDEM RIGHTS. A "Tandem Right" means a stock
appreciation right granted appurtenant to an Option which is subject to the
same terms and conditions applicable to the particular Option grant to which
it pertains with the following exceptions: The Tandem Right shall require
the holder to elect between the exercise of the underlying Option for shares
of Common Stock and the surrender, in whole or in part, of such Option for an
appreciation distribution. The appreciation distribution payable on the
exercised the Tandem Right shall be in cash (or, if so provided, in an
equivalent number of shares of Common Stock based on Fair Market Value on the
date of the Option surrender) in an amount up to the excess of (A) the Fair
Market Value (on the date of the Option surrender) of the number of shares of
Common Stock covered by that portion of the surrendered Option in which the
Optionee is vested over (B) the aggregate exercise price payable for such
vested shares.
(2) CONCURRENT RIGHTS. A "Concurrent Right" means a stock
appreciation right granted appurtenant to an Option which applies to all or a
portion of the shares of Common Stock subject to the underlying Option and
which is subject to the same terms and conditions applicable to the
particular Option grant to which it pertains with the following exceptions:
A Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of
Common Stock to which the Concurrent Right pertains. The appreciation
distribution payable on an exercised Concurrent Right shall be in cash (or,
if so provided, in an equivalent number of shares of Common Stock based on
Fair Market Value on the date of the exercise of the Concurrent Right) in an
amount equal to such portion as determined by the Board at the time of the
grant of the excess of (A) the aggregate Fair Market Value (on the date of
the exercise of the Concurrent Right) of the vested shares of Common Stock
purchased -under the underlying Option which have Concurrent Rights
appurtenant to them over (B) the aggregate exercise price paid for such
shares.
(3) INDEPENDENT RIGHTS. An "Independent Right" means a stock
appreciation right granted independently of any Option but which is subject
to the same terms and conditions applicable to a Nonstatutory Stock Option
with the following exceptions: An Independent Right shall be denominated in
share equivalents. The appreciation distribution payable on the exercised
Independent Right shall be not greater than an amount equal to the excess of
(a) the aggregate Fair Market Value (on the date of the exercise of the
Independent Right) of a number of shares of Company stock equal to the number
of share equivalents in which the holder is vested under such Independent
Right, and with respect to which the holder is exercising the Independent
Right on such date, over (b) the aggregate Fair Market Value (on the
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date of the grant of the Independent Right) of such number of shares of
Company stock. The appreciation distribution payable on the exercised
Independent Right shall be in cash or, if so provided, in an equivalent
number of shares of Common Stock based on Fair Market Value on the date of
the exercise of the Independent Right.
(ii) RELATIONSHIP TO OPTIONS. Stock appreciation rights
appurtenant to Incentive Stock Options may be granted only to Employees. The
"Section 162(m) Limitation" provided in subsection 5(c) and any authority to
reprice Options shall apply as well to the grant of stock appreciation rights.
(iii) EXERCISE. To exercise any outstanding stock appreciation
right, the holder shall provide written notice of exercise to the Company in
compliance with the provisions of the Stock Award Agreement evidencing such
right. Except as provided in subsection 5(c) regarding the "Section 162(m)
Limitation," no limitation shall exist on the aggregate amount of cash
payments that the Company may make under the Plan in connection with the
exercise of a stock appreciation right.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common
Stock required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell
shares of Common Stock upon exercise of the Stock Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any stock issued or issuable
pursuant to any such Stock Award. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such Stock
Awards unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will
vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.
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(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant or other holder of Stock Awards any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant
to the terms of such Consultant's agreement with the Company or an Affiliate
or (iii) the service of a Director pursuant to the Bylaws of the Company or
an Affiliate, and any applicable provisions of the corporate law of the state
in which the Company or the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options
or portions thereof which exceed such limit (according to the order in which
they were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii)
to give written assurances satisfactory to the Company stating that the
Participant is acquiring the stock subject to the Stock Award for the
Participant's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (iii)
the issuance of the shares upon the exercise or acquisition of stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act or (iv) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Plan as such counsel
deems necessary or appropriate in order to comply with applicable securities
laws, including, but not limited to, legends restricting the transfer of the
stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following
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means (in addition to the Company's right to withhold from any compensation
paid to the Participant by the Company) or by a combination of such means:
(i) tendering a cash payment; (ii) authorizing the Company to withhold shares
from the shares of the Common Stock otherwise issuable to the participant as
a result of the exercise or acquisition of stock under the Stock Award; or
(iii) delivering to the Company owned and unencumbered shares of the Common
Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Option, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and the outstanding Options will be
appropriately adjusted in the class(es) and number of securities and price
per share of stock subject to such outstanding Options. Such adjustments
shall be made by the Board, the determination of which shall be final,
binding and conclusive. (The conversion of convertible securities, cashless
exercise of options and net exercise of warrants shall not be treated as
transactions "without receipt of consideration" by the Company.)
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, then,
subject to paragraph (c) of this Section 11, at the sole discretion of the
Board and to the extent permitted by applicable law: (i) any surviving
corporation shall assume any Options outstanding under the Plan or shall
substitute similar Options for those outstanding under the Plan, (ii) such
Stock Awards shall continue in full force and effect, or (iii) the time
during which such Stock Awards become vested or may be exercised shall be
accelerated and any outstanding unexercised rights under any Stock Awards
terminated if not exercised prior to such event. In the event any surviving
corporation or acquiring corporation refuses to assume such Options or to
substitute similar Options for those outstanding under the Plan, then with
respect to Options held by Optionees whose Continuous Service has not
terminated, the vesting shall be accelerated in full, and the Options shall
terminate if not exercised at or prior to such event. With respect to any
other Options outstanding under the Plan, such Options shall terminate if not
exercised prior to such event.
(c) In the event of either (i) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or an Affiliate of the
Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, which
acquisition has not been approved by resolution of the
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Company's Board of Directors, or (ii) a change in a majority of the
membership of the Company's Board of Directors within a twenty-four (24)
month period where the selection of such majority either (A) was not approved
by a majority of the members of the Board of Directors at the beginning of
such twenty-four (24) month period or (B) occurred as the result of an actual
or threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of any person other than the Board (a "Proxy
Contest"), including by reason of any agreement intended to avoid or settle
any Election Contest or Proxy Contest, then to the extent not prohibited by
applicable law, the time during which options outstanding under the Plan may
be exercised shall be accelerated prior to such event, but only to the extent
that such options would have become exercisable within thirty (30) months of
the date of such event, and the options terminated if not exercised after
such acceleration and at or prior to such event.
12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Board makes the determination granting such Option. Notice of the
determination shall be given to each Employee or Consultant to whom an Option
is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable.
(b) EFFECT OF AMENDMENT OR TERMINATION. Options granted before
amendment of the Plan shall not be impaired any amendment unless mutually
agreed otherwise between the Optionee and the Company, which agreement must
be in writing and signed by the Optionee and the Company.
14. SECURITIES LAW COMPLIANCE.
Notwithstanding any provisions relating to vesting contained herein or
in an Option, no Option granted hereunder may be exercised unless the shares
issuable upon exercise of such option are then registered under the
Securities Act of 1933, as amended.
15. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
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16. OPTION AGREEMENT.
Options shall be evidenced by written Option Agreements in such form or
forms as the Board or the Committee shall approve.
17. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to
time, may amend the Plan. However, except as provided in Section 11 relating
to adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder
approval is necessary to satisfy the requirements of Section 422 of the Code,
Rule 16b-3 or any Nasdaq or securities exchange listing requirements.
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion,
submit any other amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees with the maximum benefits provided or
to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring
the Plan and/or Incentive Stock Options granted under it into compliance
therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the
Plan unless (i) the Company requests the consent of the Participant and (ii)
the Participant consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from
time to time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under any Stock Award shall not be impaired by any
such amendment unless (i) the Company requests the consent of the Participant
and (ii) the Participant consents in writing.
18. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the day before
the tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Rights and obligations under any
Stock Award granted while the Plan is in effect shall not be impaired by
suspension or termination of the Plan, except with the written consent of the
Participant.
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19. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after
the date the Plan is adopted by the Board.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 23, 1998, except as to Note 13 which is dated March 18, 1998,
appearing on page 27 of Wind River Systems, Inc.'s Annual Report on Form 10-K
for the year ended January 31, 1998. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
San Jose, California
July 17, 1998
