<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MERIDIAN DATA, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------
(2) Aggregate number of securities to which transaction applies:
--------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: (A)
---------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------
(5) Total fee paid: $125.00
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(A) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
MERIDIAN DATA, INC.
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 1997
---------------
TO THE SHAREHOLDERS:
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Meridian Data, Inc., a California corporation, (the "Company") will be held on
Wednesday, April 23, 1997 at 9:30 a.m., local time, at The Inn at Pasa Tiempo,
located at 555 Highway 17, Santa Cruz, California 95060 for the following
purposes:
1. To elect directors of the Company.
2. To adopt the Company's 1997 Incentive Stock Plan and reserve
900,000 shares of Common Stock for issuance thereunder.
3. To amend the 1992 Employee Stock Purchase Plan to increase the
number of shares available for issuance.
4. To approve the reincorporation of the Company from California
to Delaware.
5. To confirm the appointment of Price Waterhouse LLP as the
Company's independent accountants for the 1997 fiscal year.
6. To transact such other business as may properly come before
the meeting or any adjournment thereof.
These matters are more fully described in the Proxy Statement
accompanying this Notice.
Only shareholders of record at the close of business on March 5, 1997
are entitled to vote at the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any shareholder attending the meeting may
vote in person even if the shareholder has returned a proxy.
By Order of The Board of Directors
Mario M. Rosati
Secretary
Scotts Valley, California
April 23, 1997
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IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU RETURNED
A PROXY.
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<PAGE> 3
MERIDIAN DATA, INC.
---------------
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
---------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Meridian Data, Inc. ("Meridian"or the "Company") for use at the Annual Meeting
of Shareholders to be held on April 23, 1997 at 9:30 a.m., local time, or at any
adjournment thereof, for the purposes set forth in this Proxy Statement and in
the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at The Inn at Pasatiempo. The Company's principal executive
offices are located at 5615 Scotts Valley Drive, Scotts Valley, California
95066. The Company's telephone number is (408) 438-3100.
This Proxy Statement is being mailed on or about March 26, 1997 to all
shareholders entitled to vote at the meeting.
RECORD DATE AND SHARE OWNERSHIP
Only holders of Common Stock of record at the close of business on
March 5, 1997 are entitled to notice of the meeting and to vote at the meeting.
At the record date, shares of the Company's Common Stock were issued
and outstanding and held of record by approximately shareholders.
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock of the Company as of February 25, 1997 by
(i) each person known by the Company to be a beneficial owner of 5% or more of
the Company's outstanding Common Stock, (ii) each director, (iii) each executive
officer named in the Summary Compensation Table below and (iv) all directors and
executive officers as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED (1)
-------------------------
FIVE PERCENT SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS NUMBER PERCENT
- ----------------------------------------------------------- ------ -------
<S> <C> <C>
Pioneering Management Corporation................................. 915,000 9.55%
60 State Street
Boston, MA 02114
Charlie Bass (2).................................................. 166,121 1.73%
Gianluca U. Rattazzi (3).......................................... 45,002 *
Erik E. Miller (4)................................................ 69,453 *
Shmuel Shottan (5)................................................ 54,708 *
Pierluigi Zappacosta (6).......................................... 22,000 *
Peter R. Johnson (7).............................................. 11,250 *
Mario M. Rosati (8)............................................... 11,250 *
All executive officers and directors as group (8 persons) (9)..... 379,784 3.85%
</TABLE>
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* Less than 1%.
<PAGE> 4
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days
are deemed to be beneficially owned by the person holding such option
for computing the percentage ownership of such person but are not
treated as outstanding for computing the percentage of any other
person.
(2) Includes 46,165 shares held by The Bass Trust, U/D/T/ Dated April 29,
1988, of which Dr. Bass is the trustee. Also includes 73,290 shares
subject to options held by The Bass Trust, which are exercisable within
60 days after February 25, 1997 and 46,666 shares subject to options
held by Bass Associates, which are exercisable within 60 days after
February 25, 1997. Dr. Bass disclaims beneficial ownership of the
shares and options held by Bass Associates, except to the extent of his
proportionate interest therein.
(3) Includes 45,002 shares subject to options exercisable within 60 days
after February 25, 1997.
(4) Includes 49,617 shares subject to options exercisable within 60 days
after February 25, 1997.
(5) Includes 54,708 shares subject to options exercisable within 60 days
after February 25, 1997.
(6) Includes 22,000 shares subject to options exercisable within 60 days
after February 25, 1997.
(7) Includes 11,250 shares subject to options exercisable within 60 days
after February 25, 1997.
(8) Includes 11,250 shares subject to options exercisable within 60 days
after February 25, 1997.
(9) Includes 313,783 shares subject to options exercisable within 60 days
after February 25, 1997.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each share of Common Stock outstanding on the record date is entitled
to one vote. In the election of directors (Proposal No. 1), each shareholder may
cast for a single candidate, or distribute among up to five candidates, a number
of votes equal to five multiplied by the number of shares held by such
shareholder. Cumulative voting will apply only to those candidates whose names
have been properly placed in nomination prior to the commencement of voting, and
only if a shareholder has given notice to the Secretary prior to the
commencement of voting of the shareholder's intention to cumulate votes. On all
other matters, each share has one vote.
The cost of soliciting proxies will be borne by the Company. The
Company may retain the services of the Boston EquiServe to solicit proxies, for
which the Company estimates that it would pay a fee not to exceed $7,500. The
Company expects to reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, in person or by telephone or facsimile.
REQUIRED VOTE
If a quorum is present at the Annual Meeting or any adjournments
thereof, the five candidates receiving the highest number of affirmative votes
shall be elected directors; votes against any candidate and votes withheld shall
have no legal effect.
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<PAGE> 5
On all other proposals set forth herein, the affirmative vote of the majority of
the Votes Cast (as defined below) shall be the act of the shareholders.
The affirmative vote of a majority of the Votes Cast will be required
under California law to approve the amendment to the Company's other proposals
set forth herein. For this purpose, the "Votes Cast" are defined under
California law to be the shares of the Company's Common Stock represented and
"voting" at the Annual Meeting. In addition, the affirmative votes must
constitute at least a majority of the required quorum, which quorum is a
majority of the shares outstanding on the Record Date. Votes that are cast
against the proposal will be counted for purposes of determining (i) the
presence or absence of a quorum and (ii) the total number of Votes Cast with
respect to the proposal. While there is no definitive statutory or case law
authority in California as to the proper treatment of abstentions in the
counting of votes with respect to a proposal, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total number
of Votes Cast with respect to the proposal. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against the
proposal. Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for purposes of determining the number of Votes Cast with respect to the
proposal.
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<PAGE> 6
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
NOMINEES
A board of five directors will be elected at the Annual Meeting. The
Company's Bylaws authorize a board of four to seven directors, currently set at
five. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the five nominees of the Board of Directors named below,
all of whom are presently directors of the Company. If any nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. If shareholders nominate persons
other than the Company's nominees for election as directors, the proxy holders
will vote all proxies received by them in accordance with cumulative voting to
assure the election of as many of the Board's nominees as possible.
The Board of Directors recommends the following nominees:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- -----
<S> <C> <C> <C>
Charlie Bass 54 Chairman of the Board of Directors of Meridian Data, Inc. 1988
Peter R. Johnson 49 Chairman of the Board of Directors of QuickResponse Services, 1995
Inc.
Gianluca U. Rattazzi 43 President and Chief Executive Officer of Meridian Data, Inc. 1988
Mario M. Rosati 50 Member of Wilson Sonsini Goodrich & Rosati 1995
Pierluigi Zappacosta 45 President of Logitech, Inc. 1992
</TABLE>
Dr. Bass co-founded the Company in July 1988 and has been the Chairman
of the Board of Directors since inception to August 1990 and from July 1991 to
the present. From July 1991 to October 1992, Dr. Bass served as Chief Executive
Officer of the Company. Dr. Bass currently serves as a director of several
private companies. Dr. Bass is also a consulting professor of electrical
engineering at Stanford University. Dr. Bass was a co-founder and a director of
Ungermann-Bass, Inc., a networking company which is now a wholly-owned
subsidiary of Tandem Computer Incorporated. Dr. Bass holds a Ph.D.
in Electrical Engineering from the University of Hawaii.
Mr. Johnson became director of the Company in April 1995. He founded
PRJ, a software company, and served as its Chairman and Chief Executive Officer
from its inception in 1984 until it was acquired by UNIQUEST, Inc. in May 1993.
Mr. Johnson served as the President and Chief Executive Officer of UNIQUEST from
December 1993 through December 1994. Mr. Johnson also founded QuickResponse
Services, Inc. (QRSI) and has been QRSI's Chairman since its inception in 1988.
Mr. Johnson served as Chief Executive Officer of QRSI from its inception to
March 1991 and again from January 1992 to May 1993. Before founding these
companies Mr. Johnson was a corporate general manager of The Myer Emporium
Limited, a large retailer in Australia.
Dr. Rattazzi co-founded the Company in July 1988. He has served as
President and a director of the Company since inception and was appointed Chief
Executive Officer in October 1992. From 1985 to 1988, Dr. Rattazzi held various
executive level positions at Virtual Microsystems, Inc., a computer peripheral
networking company, most recently as President. Dr. Rattazzi holds an M.S.
degree in Electrical Engineering and Computer Science from the University of
California, Berkeley, and a Ph.D. in Physics from the University of Rome, Italy.
Mr. Rosati became a director of the Company in January 1995. For more
than the past five years, he has been a member of Wilson, Sonsini, Goodrich &
Rosati, a law firm that provides counsel to the Company. Mr. Rosati is also a
director of C-ATS
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<PAGE> 7
Software, Inc., a software applications company, Genus, Inc., a manufacturer of
semiconductor equipment, and Ross Systems, Inc., a software applications
company.
Mr. Zappacosta became a director of the Company in October 1992. He
co-founded Logitech, Inc., a peripherals manufacturer, in 1981 and is currently
its President. Mr. Zappacosta holds a Laureate degree in Electrical Engineering
from the University of Rome, Italy and an M.S. degree in Computer Science from
Stanford University.
All directors hold office until the next annual meeting of shareholders
or until their successors have been elected. Officers serve at the discretion of
the board. There are no family relationships between any of the directors or
executive officers of the Company.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
The five nominees receiving the highest number of affirmative votes
present or represented and entitled to be voted for them will be elected as
directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF NOMINEES.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held three meetings during the
1996 fiscal year and did not act by unanimous written consent. No nominee who
was a director during the entire fiscal year attended fewer than 75% of the
meetings of the Board of Directors and of the committees of the Board on which
the director served, with the exception of director Bass who was absent from the
only meeting of the Pricing Committee.
The Board of Directors has a Compensation Committee, an Audit Committee
and Pricing Committee. It does not have a nominating committee or a committee
performing the functions of a nominating committee. From time to time, the Board
has created various ad hoc committees for special purposes. No such committee is
currently functioning.
The Compensation Committee consisted of directors Johnson and
Zappacosta in fiscal 1996. The Compensation Committee makes recommendations to
the Board of Directors concerning salaries and incentive compensation for
employees of and consultants to the Company, except that the Compensation
Committee has sole authority and power to grant stock options to the Company's
executive officers. The Compensation Committee held two meetings during the 1996
fiscal year and acted three times by unanimous written consent.
The Audit Committee consisted of directors Bass and Rosati in fiscal
1996. The Audit Committee recommends the engagement of the Company's independent
accountants and is primarily responsible for reviewing the results and scope of
the audit and other services provided by the Company's independent accountants.
The Audit Committee did not meet during the last fiscal year. However, Price
Waterhouse LLP reported to the full Board during the year concerning various
accounting issues and provided the Board with a report on the scope and results
of the 1995 audit.
The Pricing Committee consists of directors Rattazzi and Bass. The
Pricing Committee recommends the terms and conditions of the public offering of
the Company's Common Stock. The Pricing Committee met once during the last
fiscal year. Director Bass did not attend the meeting.
The Company has adopted provisions in its Articles of Incorporation
that eliminate the personal liability of its directors for monetary damages
arising from a breach of their fiduciary duties in certain circumstances to the
fullest extent permitted by
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<PAGE> 8
law and that authorize the Company to indemnify its directors and officers to
the fullest extent permitted by law. Such limitation does not affect the
availability of equitable remedies such as injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by California law,
including circumstances in which indemnification is otherwise discretionary
under California law. The Company has entered into indemnification agreements
with its officers and directors containing provisions which are in some respects
broader than the specific indemnification provisions contained in the California
Corporations Code. The indemnification agreements may require the Company, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors' and
officers' insurance if available on reasonable terms.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted.
DIRECTOR COMPENSATION
The Company's non-employee directors currently receive a $6,000
retainer for service on the board of directors and any committee thereof, and
directors may be reimbursed for certain expenses in connection with attendance
at board and committee meetings. Fiscal Year 1995 was the first year that the
retainer was paid. Employee Directors are eligible to receive stock option
grants under the Company's 1988 Incentive Stock Plan. Non-employee Directors are
eligible to receive stock option grants under the Director Option Plan.
EXECUTIVE OFFICER COMPENSATION
COMPENSATION TABLES
Summary Compensation Table. The following table sets forth the
compensation paid by the Company during the fiscal year ended December 31, 1996
to (i) the Chief Executive Officer, and (ii) each of the other most highly
compensated executive officers of the Company whose total annual salary and
bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
-------------------- -----------------------------
SECURITIES
FISCAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARs (#)
- --------------------------- ------ ---------- --------- ----------------
<S> <C> <C> <C> <C>
Gianluca U. Rattazzi................... 1996 220,000 175,600 0
President and Chief 1995 200,000 106,000 115,000
Executive Officer 1994 175,000 38,000 125,000
Erik E. Miller......................... 1996 120,000 70,200 0
Vice President, Finance and 1995 100,000 45,000 55,000
Chief Financial Officer 1994 88,000 13,000 25,000
Shmuel Shottan......................... 1996 140,000 65,500 0
Vice President, Engineering and 1995 122,659 43,100 50,000
Chief Technical Officer 1994 120,000 18,000 50,000
</TABLE>
STOCK OPTION INFORMATION
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<PAGE> 9
Option/SAR Grants in Last Fiscal Year. No stock options were granted to
the individuals named in the Summary Compensation Table for the year ended
December 31, 1996.
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth, for each of the executive officers named
in the Summary Compensation Table above, the shares acquired and the value
realized on each exercise of stock options during the fiscal year ended December
31, 1996 and the fiscal year end number and value of exercisable and
unexercisable options:
AGGREGATE OPTION/SAR EXERCISES IN 1996
AND 1996 YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/31/96 (#) AT 12/31/96 ($) (1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gianluca U. Rattazzi.... 80,055 $277,602 25,003 120,000 $40,576 $194,748
Erik E. Miller.......... 5,736 42,877 42,950 40,000 65,958 65,958
Shmuel Shottan.......... 8,000 59,000 46,375 45,625 26,797 39,750
</TABLE>
- ---------------------------
(1) Based upon a fair market value of $6.81 per share as of December 31,
1996 minus the exercise price per share.
EMPLOYMENT CONTRACTS
There are no employment contracts between the Company and any of the
executive officers named in the Summary Compensation Table above, except that
such officers are entitled to severance pay up to one year's salary in the event
of termination of employment without cause.
-8-
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
The following report is provided to shareholders by the members of the
Compensation Committee of the Board of Directors. The members of the
Compensation Committee are Peter R. Johnson and Pierluigi Zappacosta.
The Compensation Committee is responsible for making recommendations to
the Board of Directors concerning sales and incentive compensation for employees
of and consultants to the Company, except that the Compensation Committee has
sole authority and power to grant stock options to the Company's executive
officers.
The goal of the Company's compensation policies is to align executive
compensation with business objectives, corporate performance, and to attract and
retain executives who contribute to the long-term success and value of the
Company. The Company endeavors to achieve its compensation goals through the
implementation of policies that are based on the following principles:
- The Company pays competitively for experienced, highly skilled
executives:
The Company operates in a competitive and rapidly changing
high technology business environment. Executive base
compensation is targeted to the median salary paid to
comparable executives in companies of similar size, location,
and with comparable responsibilities. The individual
executive's salary is adjusted annually based on individual
performance, corporate performance, and the relative
compensation of the individual compared to the comparable
medians.
- The Company rewards executives for superior performance:
The Committee believes that a substantial portion of each
executive's compensation should be in the form of bonuses.
Executive bonuses are based on a combination of individual
performance and the attainment of corporate goals. Individual
performance goals are based on specific objectives which must
be met in order for the Company to achieve its corporate
goals. In order to attract and retain executives who are
qualified to excel in a high technology business environment,
performance in excess of the corporate goals results in higher
bonuses. Bonuses are paid quarterly after the Board of
Directors has reviewed the prior quarters results.
- The Company strives to align long-term shareholder and
executive interests:
In order to align the long-term interests of executives with
those of shareholders, the Company grants all employees, and
particularly executives, options to purchase stock. Options
are granted at the fair market value on the date of grant and
will provide value only when the price of the Common Stock
increases above the exercise price. Options are subject to
vesting provisions designed to encourage executives to remain
employed by the Company. Additional options are granted from
time to time based on individual performance and the prior
level of grants.
COMPENSATION OF GIANLUCA U. RATTAZZI, PRESIDENT AND CHIEF EXECUTIVE OFFICER
During 1996, the compensation of Dr. Rattazzi was determined by
applying the same criteria discussed at the beginning of this report used to
determine compensation and bonuses for all executive officers. Dr. Rattazzi's
compensation for 1996 is set forth in the Summary Compensation Table appearing
on page 7. Based on the Company's quarterly performance during 1996, Dr.
Rattazzi was paid quarterly bonuses based on the degree to which he attained
both individual and corporate goals.
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<PAGE> 11
SUMMARY
The Committee believes that the Company's compensation policy as
practiced to date by the Committee and the Board has been successful in
attracting and retaining qualified employees and in tying compensation directly
to corporate performance relative to corporate goals. The Company's compensation
policy will evolve over time as the Company attempts to achieve the many
short-term goals it faces while maintaining its focus on building long-term
shareholder value through technological leadership and development and expansion
of the market for the Company's products.
Respectfully submitted,
Peter R. Johnson
Pierluigi Zappacosta
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between the Company's Board of
Directors or the Compensation Committee and the board of directors or
compensation committee of any other company.
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<PAGE> 12
PERFORMANCE GRAPH
Set forth below are line graphs comparing the cumulative total return to
shareholders of the Company's Common Stock at December 31, 1996 since March 30,
1993, the date of the Company's initial public offering, to the cumulative
total return over such period of (i) the NASDAQ Broad Market Index and (ii) a
group of peer issuers consisting of NetFRAME Systems, Inc., Tricord Systems,
Inc., Auspex, Inc., Compaq Computer Corporation, AST Research, Inc. and Dell
Computer Corporation, the Company's principal competitors in the network
server market.
<TABLE>
<CAPTION>
3/30/93 12/31/93 12/31/94 12/31/95 12/31/96 % RETURN
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MDCD 100.00 100.00 33.33 90.63 56.78 -43,23
Peers 100.00 63.39 77.23 92.61 131.36 31.36%
Nasdaq 100.00 112.67 110.15 155.75 191.58 91.58%
</TABLE>
- ----------------------------
(1) The returns of each of the companies included in the group of peer
issuers selected by the Company have been wieghted according to their
respective stock market capitalization.
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<PAGE> 13
CERTAIN TRANSACTIONS
In connection with the Company's stock offering on April 24, 1996, the
Company entered into an agreement to acquire and exercise an option held by IBM
to purchase 1,229,932 shares of outstanding Common Stock from certain
shareholders of the Company including the Chairman of the Board of Directors.
Pursuant to the closing of the offering, the Company exercised the option and
acquired 1,229,932 shares of Common Stock including 66,544 shares from the
Chairman, for 11.40 per share. The shares acquired were immediately retired.
In November 1996, the Company entered into an agreement with a
development stage company ("DSC"). As part of the agreement, Meridian loaned $1
million (the "Loan") to DSC. In return, the Company received warrants
convertible into the common stock of DSC, the right to license DSC's software
technology, and a security interest in DSC's technology. Meridian is under no
obligation to advance additional funds to DSC. As a condition of the
loan, Meridian's President and Chief Executive Officer, Gianluca U. Rattazzi,
became a member of the board of directors.
FILING OF REPORTS BY DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
certain reports of ownership with the SEC and with the National Association of
Securities Dealers. Such officers, directors and shareholders are also required
by SEC rules to provide the Company with copies of all Section 16(a) forms that
they file. Based solely on its review of copies of such forms received by the
Company, or on written representations from certain reporting persons, the
Company believes that, during the period from January 1, 1996 to December 31,
1996, its executive officers, directors and ten percent shareholders filed all
required Section 16(a) reports on a timely basis.
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<PAGE> 14
PROPOSAL NO. 2:
ADOPTION OF THE 1997 INCENTIVE STOCK PLAN
PROPOSAL
In February 1997, the Board of Directors of the Company adopted the
1997 Incentive Stock Plan (the "Stock Plan") in the form of Exhibit A hereto and
reserved a total of 900,000 shares of Common Stock for issuance thereunder. At
the Annual Meeting, the shareholders are being asked to approve the adoption of
the Stock Plan and the reservation of 900,000 shares of Common Stock for
issuance thereunder.
SUMMARY OF PLAN
Purpose. The purposes of the Stock Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to employees, directors and consultants, and to promote the
success of the Company's business.
Eligibility; Administration. The Stock Plan provides that options may
be granted to employees and service providers. Incentive stock options may only
be granted to employees. The Stock Plan may be administered by the Board of
Directors or Board Committees (the "Administrator"). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code (the "Code"), the Stock Plan shall be administered by a
committee of two or more "outside directors" within the meaning of Section
162(m) of the Code. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder shall be
structured to satisfy the requirements for exemption under Rule 16b-3.
Otherwise, the Stock Plan shall be administered by the Board or a committee,
which committee shall be constituted to satisfy applicable laws.
The Administrator of the Stock Plan shall have full power to select,
from among the employees and consultants of the Company eligible for awards, the
individuals to whom awards will be granted, to make any combination of awards to
any participant and to determine the specific terms of each grant, subject to
the provisions of the Stock Plan. The interpretation and construction of any
provision of the Stock Plan by the Administrator shall be final and conclusive.
Exercise Price. The exercise price of options granted under the Stock
Plan shall be determined on the date of grant by reference to the closing price
of the Company's Common Stock as reported on the Nasdaq Stock Market. In the
event of the grant of a nonstatutory option below the fair market value, the
difference between fair market value on the date of grant and the exercise price
shall be treated as a compensation expense for accounting purposes and will
therefore affect the Company's earnings. In the case of options granted to an
employee who at the time of grant owns more than 10% of the voting power of all
classes of stock of the Company or any parent or subsidiary, the exercise price
must be at least 110% of the fair market value per share of the Common Stock at
the time of grant. The exercise price of incentive stock options must be at
least 100% of the fair market value per share at the time of grant.
Performance-Based Compensation Limitations. No employee shall be
granted in any fiscal year of the Company options to acquire in the aggregate
500,000 shares of Common Stock. The foregoing limitation, which shall adjust
proportionately in connection with any change in the Company's capitalization,
is intended to satisfy the requirements applicable to options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code. In the event that the Administrator determines that such limitation
is not required to qualify options as performance-based compensation, the
Administrator may modify or eliminate such limitation.
Exercisability. Options granted to new optionees under the Stock Plan
generally become exercisable starting one year after the date of grant with 25%
of the shares covered thereby becoming exercisable at that time and with an
additional 1/48 of
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the total number of option shares becoming exercisable at the beginning of each
full month thereafter, with full vesting occurring on the fourth anniversary of
the date of grant. The term of an option may not exceed ten years. No option may
be transferred by the optionee other than by will or the laws of descent or
distribution. Each option may be exercised, during the lifetime of the optionee,
only by such optionee.
Stock Purchase Rights. The Stock Plan permits the Company to grant
rights to purchase Common Stock. After the Administrator determines that it will
offer stock purchase rights under the Stock Plan, it shall advise the offeree in
writing or electronically of the terms, conditions and restrictions related to
the offer, including the number of shares that the offeree shall be entitled to
purchase, and the time within which the offeree must accept such offer. The
offer shall be accepted by execution of a stock purchase agreement or a stock
bonus agreement in the form determined by the Administrator.
Unless the Administrator determines otherwise, the stock purchase
agreement or a stock bonus agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason. The purchase price for shares
repurchased pursuant to the stock purchase agreement or a stock bonus agreement
shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at such rate as the Board or Committee may determine.
Amendment and Termination of the Stock Plan. The Board may amend the
Stock Plan at any time or from time to time or may terminate the Stock Plan
without approval of the shareholders; provided, however, that shareholder
approval is required for any amendment to the Stock Plan for which shareholder
approval would be required under applicable law, as in effect at the time.
However, no action by the Board of Directors or shareholders may alter or impair
any option previously granted under the Stock Plan. The Administrator may
accelerate any option or waive any condition or restriction pertaining to such
option at any time. The Administrator may also substitute new stock options for
previously granted stock options, including previously granted stock options
having higher option prices, and may reduce the exercise price of any option to
the then current fair market value, if the fair market value of the Common Stock
covered by such option shall have declined since the date the option was
granted. In any event, the Stock Plan shall terminate in June 2007. Any options
outstanding under the Stock Plan at the time of its termination shall remain
outstanding until they expire by their terms.
CERTAIN FEDERAL TAX INFORMATION
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or at the time it is
exercised, although exercise of the option may subject the optionee to the
alternative minimum tax. The Company will not be allowed a deduction for federal
income tax purposes as a result of the exercise of an incentive stock option
regardless of the applicability of the alternative minimum tax. Upon the sale or
exchange of the shares at least two years after grant of the option and one year
after exercise of the option, any gain will be treated as long-term capital
gain. If these holding periods are not satisfied at the time of sale, the
optionee will recognize ordinary income equal to the difference between the
exercise price and the lower of (i) the fair market value of the stock at the
date of the option exercise or (ii) the sale price of the stock, and the Company
will be entitled to a deduction in the same amount. (Different rules may apply
upon a premature disposition by an optionee who is an officer, director or 10 %
shareholder of the Company.) Any additional gain or loss recognized on such a
premature disposition of the shares will be characterized as capital gain or
loss. If the Company grants an incentive stock option and as a result of the
grant the optionee has the right in any calendar year to exercise for the first
time one or more incentive stock options for shares having an aggregate fair
market value (under all plans of the Company and determined for each share as of
the date the option to purchase the share was granted) in excess of $100,000,
then the excess shares must be treated as non-statutory options.
An optionee who is granted a non-statutory stock option will also not
recognize any taxable income upon the grant of the option. However, upon
exercise of a non-statutory stock option, the optionee will recognize ordinary
income for tax purposes measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized by an optionee
who is an employee of the Company will be subject to tax withholding by the
Company. Upon resale of the shares
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by the optionee, any difference between the sales price and the fair market
value at the time of exercise, to the extent not recognized as ordinary income
as described above, will be treated as capital gain or loss. The Company will be
allowed a deduction for federal income tax purposes equal to the amount of
ordinary income recognized by the optionee.
The foregoing summary of the federal income tax consequences of Stock
Plan transactions is based upon federal income tax laws in effect on the date of
this Proxy Statement. This summary does not purport to be complete, and does not
discuss foreign, state or local tax consequences.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the amendment to the Stock Plan requires the affirmative
vote of the votes cast.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ADOPTION OF THE STOCK PLAN. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT
OF A VOTE AGAINST THIS PROPOSAL.
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PROPOSAL NO. 3:
AMENDMENT TO THE 1992 EMPLOYEE STOCK PURCHASE PLAN
TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE
PROPOSAL
The Board of Directors of the Company amended the Company's 1992
Employee Stock Purchase Plan (the "ESPP") in February 1997, subject to
shareholder approval, to increase the number of shares reserved for issuance
under the plan by an aggregate of 100,000 shares to a new total of 300,000
shares.
The proposed increase in the number of shares of Common Stock reserved
for issuance under the ESPP is for the purposes of establishing a reserve for
stock option grants to employees pursuant to the terms of the ESPP.
SUMMARY OF THE ESPP
Purpose. The purpose of the ESPP is to provide employees of the Company
with an opportunity to purchase Common Stock of the Company through accumulated
payroll deductions.
Status of Shares. Of the 200,000 shares authorized prior to the
amendment described above, 114,163 shares had been purchased as of December 31,
1996, and 85,837 shares remained available for future purchase as of such date.
Administration. The ESPP may be administered by the Board of Directors
or a committee appointed by the Board (the "Administrator"). All questions of
interpretation or application of the ESPP are determined by the Administrator,
whose decisions are final and binding upon all participants. Members of the
Board who are eligible employees are permitted to participate in the ESPP but
may not vote on any matter affecting the administration thereof or the grant of
any option pursuant thereto. No director who is eligible to participate in the
ESPP may be a member of the committee appointed to administer it. No charges for
administrative or other costs may be made against the payroll deductions of a
participant in the ESPP. Members of the Board receive no additional compensation
for their services in connection with the administration of the ESPP.
Eligibility and Participation. Any person who is employed by the
Company (or any of its majority-owned subsidiaries) for 20 hours per week and
more than five months in a calendar year is eligible to participate in the ESPP,
provided that the employee is employed on the first day of an offering period.
Eligible employees become participants in the ESPP by delivering to the Company
a subscription agreement authorizing payroll deductions five business days prior
to the applicable enrollment date, unless a later time for filing the
subscription agreement has been set for all eligible employees. An employee who
becomes eligible to participate in the ESPP after the commencement of an
offering period may not participate in the ESPP until the commencement of the
next offering period.
Offering Dates. The ESPP has six month offering periods beginning on
the first trading day on or after May 1 and November 1. Shares are purchased for
participating employees once every six months on the last day of each purchase
period (the last day of each purchase period being the "Exercise Date"). The
Board may alter the duration of the offering periods and purchase periods
without shareholder approval.
Purchase Price. The purchase price per share at which shares will be
sold under the ESPP is the lower of 85% of the fair market value of the Common
Stock on the first day of each offering period or 85% of the fair market value
of the Common Stock on the Exercise Date.
The purchase price of the shares is accumulated by payroll deductions
during the offering period. The deductions may not exceed 10% of a participant's
eligible compensation, which is defined in the ESPP to include the base straight
time gross
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<PAGE> 18
earnings, commissions and shift premium, but excluding incentive compensation
and payments, bonuses or other compensation. A participant may at any time
discontinue his or her participation in the ESPP or may increase or decrease the
rate of payroll deductions. Payroll deductions shall commence on the first
payday in the offering period, and shall continue at the same rate until the end
of the offering period and for consecutive offering periods unless sooner
terminated as provided in the ESPP. All payroll deductions are credited to the
participant's account under the ESPP and are deposited with the general funds of
the Company. All payroll deductions received or held by the Company may be used
by the Company for any corporate purpose.
Purchase of Stock. At the beginning of each offering period, by
executing a subscription agreement to participate in the ESPP, each participant
is in effect granted an option to purchase shares of Common Stock on each
Exercise Date. The maximum number of shares placed under option to a participant
in an offering period is that number determined by dividing the amount of
participant's total payroll deductions to be accumulated during the offering
period by the applicable purchase price. Unless a participant withdraws from the
ESPP, such participant's option for the purchase of shares will be exercised
automatically at the end of the offering period for the maximum number of shares
at the applicable price.
Notwithstanding the foregoing, no employee will be permitted to
subscribe for shares under the ESPP if, immediately after the grant of the
option, the employee would own 5% or more of the voting power or value of all
classes of stock of the Company or of a parent or of any of its subsidiaries
(including stock which may be purchased under the ESPP or pursuant to any other
options), nor shall any employee be granted an option that would permit the
employee to buy more than $25,000 worth of stock (determined at the fair market
value of the shares at the time the option is granted) pursuant to all Company
stock purchase plans in any calendar year.
Withdrawal. A participant's interest in a given offering may be
terminated in whole, but not in part, by signing and delivering to the Company a
notice of withdrawal from the ESPP. Any withdrawal by the participant of
accumulated payroll deductions for a given offering period automatically
terminates the participant's interest in that offering period. The failure to
maintain continuous status as an employee of the Company for at least 20 hours
per week during an offering period will be deemed to be a withdrawal from that
offering period. The ESPP also provides that participants will be deemed to have
withdrawn from an offering during certain leaves of absence. Generally, a
participant's withdrawal from an offering period does not have any effect upon
such participant's eligibility to participate in subsequent offering periods.
Termination of Employee. Termination of a participant's employment for
any reason, including retirement or death, cancels his or her participation in
the ESPP immediately. In such event, the payroll deductions credited to the
participant's account will be returned to such participant or, in the case of
death, to the person or persons entitled thereto as specified by the employee in
the subscription agreement.
Nontransferability. No rights or accumulated payroll deductions of a
participant under the ESPP may be pledged, assigned or transferred for any
reason and any such attempt may be treated by the Company as an election to
withdraw from the ESPP.
Amendment and Termination of the ESPP. The Board may at any time amend
or terminate the ESPP, except that such termination shall not affect options
previously granted, provided that an offering period may be terminated if the
Board determines that such termination is in the best interests of the Company
and its shareholders. No amendment may be made to the ESPP without prior
approval of the shareholders of the Company if such amendment would constitute
an amendment for which shareholder approval is required under the federal
securities laws or the Code. In any event, the ESPP will terminate by its own
terms in 2003.
CERTAIN FEDERAL INCOME TAX INFORMATION
The ESPP, and the right of participants to make purchases thereunder,
is intended to qualify under the provisions of Sections 421 and 423 of the Code.
Under these provisions, no income will be taxable to a participant until the
sale or other
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<PAGE> 19
disposition of the shares purchased under the ESPP. Upon such sale or
disposition, the participant will generally be subject to tax in an amount that
depends upon the holding period. If the shares are sold or disposed of more than
two years from the first day of the offering period, the participant will
recognize ordinary income measured as the lesser of (a) the excess of the fair
market value of the shares at the time of such sale or disposition over the
purchase price or (b) an amount equal to 15% of the fair market value of the
shares as of the first day of the offering period. Any additional gain will be
treated as long-term capital gain. If the shares are sold or otherwise disposed
of before the expiration of this holding period, the participant will recognize
ordinary income generally measured as the excess of the fair market value of the
shares on the date the shares are purchased over the purchase price. Any
additional gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. The Company is
not entitled to a deduction for amounts taxed as ordinary income or capital gain
to a participant except to the extent of ordinary income recognized upon a sale
or disposition of shares prior to the expiration of the holding periods
described above.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the amendment to the ESPP requires the affirmative vote of
a majority of the Votes Cast.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE AMENDMENT TO THE ESPP. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT OF
A VOTE AGAINST THIS PROPOSAL.
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PROPOSAL NO. 4:
REINCORPORATION IN DELAWARE
INTRODUCTION
The Board of Directors believes that the best interests of the Company
and its shareholders will be served by changing the state of incorporation of
the Company from California to Delaware (the "Reincorporation Proposal" or the
"Proposed Reincorporation"). As discussed below, the principal reasons for
reincorporation are the greater flexibility of Delaware corporate law, the
substantial body of case law interpreting that law and the increased ability of
the Company to attract and retain qualified directors. The Company believes that
its shareholders will benefit from the well established principles of corporate
governance that Delaware law affords. Although Delaware law provides the
opportunity for the Board of Directors to adopt various mechanisms that may
enhance the Board's ability to negotiate favorable terms for the shareholders in
the event of an unsolicited takeover attempt, the proposed Delaware certificate
of incorporation and bylaws are substantially similar to those currently in
effect in California, with the exception that cumulative voting (permitted but
never to date exercised by the Company's shareholders) will be eliminated. The
Reincorporation Proposal is not being proposed in order to prevent an
unsolicited takeover attempt, nor is it in response to any present attempt known
to the Board of Directors to acquire control of the Company, obtain
representation on the Board of Directors or take significant action that affects
the Company. Shareholders are urged to read carefully the following sections of
this Proxy Statement, including the related exhibits, before voting on the
Reincorporation Proposal. Throughout the Proxy Statement, the term "Meridian
California" refers to the existing California corporation and the term "Meridian
Delaware" refers to the new proposed Delaware corporation, a wholly-owned
subsidiary of Meridian California, which is the proposed successor to Meridian
California.
The Reincorporation Proposal will be effected by merging Meridian
California into Meridian Delaware (the "Merger"). Upon completion of the Merger,
Meridian California will cease to exist and Meridian Delaware will continue to
operate the business of the Company under the name Meridian, Inc. Pursuant to
the Agreement and Plan of Merger between Meridian California and Meridian
Delaware, a copy of which is attached hereto as Exhibit B (the "Merger
Agreement"), each outstanding share of Meridian California Common Stock, no par
value, will automatically be converted into one share of Meridian Delaware
Common Stock, $.001 par value. IT IS NOT NECESSARY FOR SHAREHOLDERS TO EXCHANGE
THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF MERIDIAN DELAWARE.
Upon the date on which the Merger is effective (the "Effective Date"),
Meridian Delaware will also assume and continue the outstanding stock options
and all other employee benefit plans of Meridian California. Each outstanding
and unexercised option or other right to purchase shares of Meridian California
Common Stock will become an option or right to purchase the same number of
shares of Meridian Delaware Common Stock on the same terms and conditions and at
the same exercise price applicable to any such Meridian California option or
stock purchase right at the Effective Date.
The Proposed Reincorporation has been unanimously approved by Meridian
California's Board of Directors. If approved by the shareholders, it is
anticipated that the Effective Date of the Merger will be as soon as reasonably
practicable following the Annual Meeting of Shareholders. However, pursuant to
the Merger Agreement, the Merger may be abandoned or the Merger Agreement may be
amended by the Board of Directors (except that certain principal terms may not
be amended without shareholder approval) either before or after shareholder
approval has been obtained and prior to the Effective Date of the Proposed
Reincorporation if, in the opinion of the Board of Directors of either company,
circumstances arise that make it inadvisable to proceed.
Shareholders of Meridian California will have no dissenters' rights of
appraisal with respect to the Reincorporation Proposal. See "Significant
Differences Between the Corporation Laws of California and Delaware - Appraisal
Rights." The discussion set forth below is qualified in its entirety by
reference to the Merger Agreement, the Certificate of Incorporation and the
Bylaws of Delaware copies of which are attached hereto as Exhibits B, C and D
respectively.
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<PAGE> 21
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
As the Company plans for the future, the Board of Directors and
management believe that it is essential to be able to draw upon well established
principles of corporate governance in making legal and business decisions. The
prominence and predictability of Delaware corporate law provide a reliable
foundation on which the Company's governance decisions can be based and the
Company believes that shareholders will benefit from the responsiveness of
Delaware corporate law to their needs and to those of the corporation they own.
Prominence, Predictability and Flexibility of Delaware Law. For many
years Delaware has followed a policy of encouraging incorporation in that state
and in furtherance of that policy, has been a leader in adopting, construing and
implementing comprehensive, flexible corporate laws responsive to the legal and
business needs of corporations organized under its laws. Many corporations have
chosen Delaware initially as a state of incorporation or have subsequently
changed corporate domicile to Delaware in a manner similar to that proposed by
the Company. Because of Delaware's prominence as the state of incorporation for
many major corporations, both the legislature and courts in Delaware have
demonstrated an ability and a willingness to act quickly and effectively to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
Increased Ability to Attract and Retain Qualified Directors. Both
California and Delaware law permit a corporation to include a provision in its
certificate of incorporation that reduces or limits the monetary liability of
directors for breaches of fiduciary duty in certain circumstances. The
increasing frequency of claims and litigation directed against directors and
officers has greatly expanded the risks facing directors and officers of
corporations in exercising their respective duties. The amount of time and money
required to respond to such claims and to defend such litigation can be
substantial. It is the Company's desire to reduce these risks to its directors
and officers and to limit situations in which monetary damages can be recovered
against directors so that the Company may continue to attract and retain
qualified directors who otherwise might be unwilling to serve because of the
risks involved. The Company believes that, in general, Delaware law provides
greater protection to directors than California law and that Delaware case law
regarding a corporation's ability to limit director liability is more developed
and provides more guidance than California law.
Well Established Principles of Corporate Governance. There is
substantial judicial precedent in the Delaware courts as to the legal principles
applicable to measures that may be taken by a corporation and as to the conduct
of the Board of Directors under the business judgment rule. The Company believes
that its shareholders will benefit from the well established principles of
corporate governance that Delaware law affords.
NO CHANGE IN THE NAME, BOARD MEMBERS, BUSINESS, MANAGEMENT, EMPLOYEE PLANS OR
LOCATION OF PRINCIPAL FACILITIES OF THE COMPANY
The Reincorporation Proposal will effect a change in the legal domicile
of the Company, but not its physical location. The Proposed Reincorporation will
not result in any change in the name, business, management, fiscal year, assets
or liabilities (except to the extent of legal and other costs of effecting the
reincorporation) or location of the principal facilities of the Company. The
five directors who are elected at the Annual Meeting of Shareholders will become
the directors of Meridian Delaware. All employee benefit plans of Meridian
California will be assumed and continued by Meridian Delaware. All stock
options, warrants or other rights to acquire Common Stock of Meridian California
will automatically be converted into an option or right to purchase the same
number of shares of Meridian Delaware Common Stock at the same price per share,
upon the same terms, and subject to the same conditions. Meridian California's
other employee benefit arrangements will also be continued by Meridian Delaware
upon the terms and subject to the conditions currently in effect.
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ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the certificate of incorporation or
bylaws or otherwise, which measures are designed to reduce a corporation's
vulnerability to unsolicited takeover attempts. The Reincorporation Proposal is
not being proposed in order to prevent an unsolicited takeover attempt, nor is
it in response to any present attempt known to the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors or take
significant action that affects the Company.
Nevertheless, certain effects of the Reincorporation Proposal may be
considered to have antitakeover implications. Section 203 of the Delaware
General Corporation Law ("Section 203"), from which Meridian Delaware does not
intend to opt out, restricts certain "business combinations" with "interested
stockholders" for three years following the date that a person or entity becomes
an interested stockholder, unless the Board of Directors approves the business
combination and/or other requirements are met. See "Significant Differences
Between the Corporation Laws of California and Delaware Stockholder Approval of
Certain Business Combinations." Furthermore, the elimination of cumulative
voting could be viewed as having an antitakeover effect in that it can make it
more difficult for a minority shareholder to gain a seat on the Board. Other
measures permitted under Delaware law, which the Company does not intend to
implement, include the establishment of a staggered board of directors and the
elimination of the right of stockholders controlling at least ten percent (10%)
of the voting shares to call a special meeting of stockholders. The elimination
of cumulative voting and the establishment of a classified board of directors
can also be undertaken under California law in certain circumstances. For a
detailed discussion of all of the changes that will be implemented as part of
the Proposed Reincorporation, see "The Charters and Bylaws of Meridian
California and Meridian Delaware." For a discussion of differences between the
laws of California and Delaware, see "Significant Differences Between the
Corporation Laws of California and Delaware."
In addition, Delaware law permits a corporation to adopt such measures
as stockholder rights plans, designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. There is substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive measures
and as to the conduct of a board of directors under the business judgment rule
with respect to unsolicited takeover attempts. The Board of Directors has no
present intention following the Proposed Reincorporation to amend the
Certificate of Incorporation or Bylaws to include provisions that might deter an
unsolicited takeover attempt. However, in the discharge of its fiduciary
obligations to its shareholders, the Board of Directors of the Company will
continue to evaluate the Company's vulnerability to potential unsolicited bids
to acquire the Company on unfavorable terms and to consider strategies to
enhance the Board's ability to negotiate with an unsolicited bidder.
THE CHARTERS AND BYLAWS OF MERIDIAN CALIFORNIA AND MERIDIAN DELAWARE
The provisions of the Meridian Delaware Certificate of Incorporation
and Bylaws are similar to those of the Meridian California Articles of
Incorporation and Bylaws in many respects. However, the Reincorporation Proposal
includes the authorization of undesignated Preferred Stock and the
implementation of certain provisions in the Meridian Delaware Certificate of
Incorporation and Bylaws that alter the rights of stockholders and the powers of
management. In addition, Meridian Delaware could implement certain other changes
by amending, its Certificate of Incorporation and Bylaws. For a discussion of
such changes, see "Significant Differences Between the Corporation Laws of
California and Delaware."
Authorization of Preferred Stock. The Articles of Incorporation of
Meridian California currently authorize the Company to issue up to 35,000,000
shares of Common Stock, no par value. The Certificate of Incorporation of
Meridian Delaware provides that such company will have 35,000,000 authorized
shares of Common Stock, $.001 par value, and 5,000,000 shares of Preferred
Stock, $.001 par value. In addition, Meridian Delaware's Certificate of
Incorporation provides that the Board of Directors is entitled to determine the
powers, preferences and rights, and the qualifications, limitations or
restrictions, of the authorized and unissued preferred stock. Thus, although it
has no present intention of doing so, the Board of Directors, without
stockholder approval, could authorize the issuance of Preferred Stock upon terms
which could have the effect of delaying or preventing a change in control of the
Company or modifying the rights of holders of the Company's Common Stock under
either
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California or Delaware law. The Board of Directors could also utilize such
shares for further financings, possible acquisitions and other uses.
Monetary Liability of Directors. The Articles of Incorporation of
Meridian California and the Certificate of Incorporation of Meridian Delaware
both provide for the elimination of personal monetary liability of directors to
the fullest extent permissible under law. The provisions eliminating monetary
liability of directors set forth in the Meridian Delaware Certificate of
Incorporation is potentially more expansive than the corresponding provisions in
the Meridian California Articles of Incorporation, in that the former
incorporates future amendments to Delaware law with respect to the elimination
of such liability. For a more detailed explanation of the foregoing, see
"Significant Differences Between the Corporation Laws of California and Delaware
- - Indemnification and Limitation of Liability."
Size of the Board of Directors. The Bylaws of Meridian Delaware provide
for a Board of Directors consisting of a range of five to seven directors
currently set at five directors. The Bylaws of Meridian California provide for a
Board of Directors consisting of a range of four to seven directors currently
set at five directors. Under California law, although changes in the number of
directors, in general, must be approved by a majority of the outstanding shares,
the Board of Directors may fix the exact number of directors within a stated
range set forth in the articles of incorporation or bylaws, if the stated ranges
have been approved by the shareholders. Delaware law permits the board of
directors acting alone, to change the authorized number of directors by
amendment to the bylaws, unless the directors are not authorized to amend the
bylaws or the number of directors is fixed in the certificate of incorporation
(in which case a change in the number of directors may be made only by amendment
to the certificate of incorporation following approval of such change by the
stockholders). The Meridian Delaware Certificate of Incorporation provides that
the number of directors will be as specified in the Bylaws and authorizes the
Board of Directors to adopt, alter, amend or repeal the Bylaws. Following the
Proposed Reincorporation, the Board of Directors of Meridian Delaware could
amend the Bylaws to change the size of the Board of Directors from five without
further stockholder approval. If the Reincorporation Proposal is approved, the
five directors of Meridian California who are elected at the Annual Meeting of
Shareholders will continue as the five directors of Meridian Delaware after the
Proposed Reincorporation is consummated.
Action by Written Consent of Shareholders. Under both California law
and Delaware law, unless otherwise provided in the Articles of Incorporation
(California) or Certificate of Incorporation (Delaware), any action that may be
taken by the shareholders at any annual or special meeting may be taken without
a meeting by written consent of a majority of the holders of the outstanding
shares. The Articles of Incorporation of Meridian California did not eliminate
the ability its shareholders to act by written consent. The Certificate of
Incorporation of Meridian Delaware provides that no action shall be taken by the
stockholders of the corporation except at an annual or special meeting of the
stockholders and that no action shall be taken by the stockholders by written
consent.
Cumulative Voting for Directors. Under California law, if any
shareholder has given notice of an intention to cumulate votes for the election
of directors, any other shareholder of the corporation is also entitled to
cumulate his or her votes at such election. Cumulative voting provides that each
share of stock normally having one vote is entitled to a number of votes equal
to the number of directors to be elected. A shareholder may then cast all such
votes for a single candidate or may allocate them among as many candidates as
the shareholder may choose. In the absence of cumulative voting, the holders of
a majority of the shares present or represented at a meeting in which directors
are to be elected would have the power to elect all the directors to be elected
at such meeting, and no person could be elected without the support of holders
of a majority of the shares present or represented at such meeting. Elimination
of cumulative voting could make it more difficult for a minority shareholder
adverse to a majority of the shareholders to obtain representation on the
Company's Board of Directors. California corporations whose stock is listed on a
national stock exchange or whose stock is held by 800 shareholders of record and
included in the Nasdaq National Market System (a "Listed Company") can also
eliminate cumulative voting with shareholder approval. The Company qualifies as
a Listed Company but has not sought shareholder approval to eliminate cumulative
voting. Under Delaware law, cumulative voting in the election of directors is
not mandatory, but is a permitted option. The Meridian Delaware Certificate of
Incorporation does not provide for cumulative voting rights.
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Power to Call Special Shareholders' Meetings. Under California law, a
special meeting of shareholders may be called by the Board of Directors, the
Chairman of the Board, the President, the holders of shares entitled to cast not
less than ten percent ( 10%) of the votes at such meeting and such additional
persons as are authorized by the articles of incorporation or the bylaws. Under
Delaware law, a special meeting of stockholders may be called by the Board of
Directors or by any other person authorized to do so in the Certificate of
Incorporation or the Bylaws. The Bylaws of Meridian Delaware currently
authorizes the Board of Directors, the Chairman of the Board, the President and
the holders of not less than ten percent (10%) of the shares entitled to vote to
call a special meeting of stockholders. Therefore, no substantive change is
contemplated in this provision, although the Board could in the future amend the
Company's Bylaws without stockholder approval.
Filling Vacancies on the Board of Directors. Under California law, any
vacancy on the board of directors other than one created by removal of a
director may be filled by the Board. If the number of directors is less than a
quorum, a vacancy may be filled by the unanimous written consent of the
directors then in office, by the affirmative vote of a majority of the directors
at a meeting held pursuant to notice or waivers of notice or by a sole remaining
director. A vacancy created by removal of a director may be filled by the board
only if so authorized by a corporation's articles of incorporation or by a bylaw
approved by the corporation's shareholders. Meridian California's Articles of
Incorporation and Bylaws do not permit directors to fill vacancies created by
removal of a director. Under Delaware law, vacancies and newly created
directorships may be filled by a majority of the directors then in office (even
though less than a quorum) or by a sole remaining director, unless otherwise
provided in the certificate of incorporation or bylaws (or unless the
certificate of incorporation directs that a particular class of stock is to
elect such directors), in which case a majority of the directors elected by such
class, or a sole remaining director so elected, shall fill such vacancy or newly
created directorship). The Bylaws of Meridian Delaware provide, consistent with
the Bylaws of Meridian California, that any vacancy created by the removal of a
director by the stockholders of Meridian Delaware may be filled only by the
stockholders. Following the Proposed Reincorporation, the Board of Directors of
Meridian Delaware could, although it has no current intention to do so, amend
the Bylaws to provide that directors may fill any vacancy created by removal of
directors by the stockholders.
Loans to Officers and Employees. Under California law, any loan or
guaranty to or for the benefit of a director or officer of the corporation or
its parent requires approval of the shareholders unless such loan or guaranty is
provided under a plan approved by shareholders owning a majority of the
outstanding shares of the corporation. However, under California law,
shareholders of any corporation with 100 or more shareholders of record, such as
the Company, may approve a bylaw authorizing the Board of Directors alone to
approve loans or guarantees to or on behalf of officers (whether or not such
officers are directors) if the Board determines that any such loan or guaranty
may reasonably be expected to benefit the corporation. The Bylaws of Meridian
California do not contain the foregoing provision. Pursuant to the Meridian
Delaware Bylaws and in accordance with Delaware law, Meridian Delaware may make
loans to, guarantee the obligations of or otherwise assist its officers or other
employees and those of its subsidiaries (including directors who are also
officers or employees) when such action, in the judgment of the directors, may
reasonably be expected to benefit the corporation.
Voting by Ballot. California law provides that the election of
directors may proceed in the manner described in a corporation's bylaws.
Meridian California's Bylaws provide that the election of directors at a
shareholders' meeting may be by voice vote or ballot, unless prior to such vote
a shareholder demands a vote by ballot, in which case such vote must be by
ballot. Under Delaware law, the right to vote by written ballot may be
restricted if so provided in the Certificate of Incorporation. The Certificate
of Incorporation of Meridian Delaware provides that elections shall not be held
by ballot unless the Bylaws of the corporation so provide. The Bylaws of
Meridian Delaware do not provide for voting by ballot. It may be more difficult
for a stockholder to contest the outcome of a vote that has not been conducted
by written ballot.
COMPLIANCE WITH DELAWARE AND CALIFORNIA LAW
Following the Annual Meeting of Shareholders, if the Reincorporation
Proposal is approved, the Company will submit the Merger Agreement to the office
of the California Secretary of State and to the office of the Delaware Secretary
of State for filing.
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SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
The corporation laws of California and Delaware differ in many
respects. Although all the differences are not set forth in this Proxy
Statement, certain provisions, which could materially affect the rights of
shareholders, are discussed below.
Stockholder Approval of Certain Business Combinations. In recent years,
a number of states have adopted special laws designed to make certain kinds of
"unfriendly" corporate takeovers, or other transactions involving a corporation
and one or more of its significant shareholders, more difficult. Under Section
203, certain "business combinations" with "interested stockholders" of Delaware
corporations are subject to a three-year moratorium unless specified conditions
are met.
Section 203 prohibits a Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for three years
following the date that such person or entity becomes an interested stockholder.
With certain exceptions, an interested stockholder is a person or entity who or
which owns, individually or with or through certain other persons or entities,
fifteen percent (15%) or more of the corporation's outstanding voting stock
(including any rights to acquire stock pursuant to an option, warrant,
agreement, arrangement or understanding, or upon the exercise of conversion or
exchange rights, and stock with respect to which the person has voting rights
only), or is an affiliate or associate of the corporation and was the owner,
individually or with or through certain other persons or entities, of fifteen
percent ( 15%) or more of such voting stock at any time within the previous
three years, or is an affiliate or associate of any of the foregoing.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder, sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation of a direct
or indirect majority-owned subsidiary equal in aggregate market value to ten
percent (10%) or more of the aggregate market value of either the corporation's
consolidated assets or all of its outstanding stock; the issuance of transfer by
the corporation or a direct or indirect majority-owned subsidiary of stock of
the corporation or such subsidiary to the interested stockholder (except for
certain transfers in a conversion or exchange or a pro rata distribution or
certain other transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock or of the corporation's voting stock); or receipt by the
interested stockholder (except proportionately as a stockholder), directly or
indirectly, of any loans, advances, guarantees, pledgees or other financial
benefits provided by, or through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section
203 does not apply if: (i) prior to the date on which such stockholder becomes
an interested stockholder the board of directors approves either the business
combination or the transaction that resulted in the person or entity becoming an
interested stockholder; (ii) upon consummation of the transaction that made him
or her an interested stockholder, the interested stockholder owns at least
eighty-five percent (85%) of the corporation's voting stock outstanding at the
time the transaction commenced (excluding from the eighty-five percent (85%)
calculation shares owned by directors who are also officers of the target
corporation and shares held by employee stock plans that do not give employee
participants the right to decide confidentially whether to accept a tender or
exchange offer); or (iii) on or after the date such person or entity becomes an
interested stockholder, the board approves the business combination and it is
also approved at a stockholder meeting by sixty-six and two-thirds percent
(662/3%) of the outstanding voting stock not owned by the interested
stockholder.
Section 203 only applies to certain publicly held corporations that
have a class of voting stock that is (i) listed on a national securities
exchange, (ii) quoted on an interdealer quotation system of a registered
national securities association or (iii) held of record by more than 2,000
stockholders. Although a Delaware corporation to which Section 203 applies may
elect not to be governed by Section 203, Meridian Delaware does not intend to so
elect.
Section 203 will encourage any potential acquiror to negotiate with the
Company's Board of Directors. Section 203 also might have the effect of limiting
the ability of a potential acquiror to make a two-tiered bid for Meridian
Delaware in which all stockholders would not be treated equally. Shareholders
should note, however, that the application of Section 203 to Meridian
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Delaware will confer upon the Board the power to reject a proposed business
combination in certain circumstances, even though a potential acquiror may be
offering a substantial premium for Meridian Delaware's shares over the
then-current market price. Section 203 would also discourage certain potential
acquirors unwilling to comply with its provisions. See "Shareholder Voting"
herein.
Removal of Directors. Under California law, any director or the entire
board of directors may be removed, with or without cause, with the approval of a
majority of the outstanding shares entitled to vote; however, no individual
director may be removed (unless the entire board is removed) if the number of
votes cast against such removal would be sufficient to elect the director under
cumulative voting. Under Delaware law, a director of a corporation that does not
have a classified board of directors or cumulative voting may be removed with or
without cause with the approval of a majority of the outstanding shares entitled
to vote at an election of directors. In the case of a Delaware corporation
having cumulative voting, if less than the entire board is to be removed, a
director may not be removed without cause if the number of shares voted against
such removal would be sufficient to elect the director under cumulative voting.
A director of a corporation with a classified board of directors may be removed
only for cause, unless the certificate of incorporation otherwise provides. The
Certificate of Incorporation of Meridian Delaware does not provide for a
classified board of directors or for cumulative voting.
Classified Board of Directors. A classified board is one on which a
certain number, but not all, of the directors are elected on a rotating basis
each year. This method of electing directors makes changes in the composition of
the board of directors more difficult and thus a potential change in control of
a corporation a lengthier and more difficult process. Pursuant to legislation
that became effective on January 1, 1990, California law now permits certain
qualifying corporations to provide for a classified board of directors by
adopting amendments to their articles of incorporation or bylaws, which
amendments must be approved by the shareholders. Although Meridian California
qualifies to adopt a classified board of directors, its Board of Directors has
no present intention of doing so. Delaware law permits, but does not require, a
classified board of directors, pursuant to which the directors can be divided
into as many as three classes with staggered terms of office, with only one
class of directors standing for election each year. The Meridian Delaware
Certificate of Incorporation and Bylaws do not provide for a classified board
and Meridian Delaware presently does not intend to propose establishment of a
classified board. The establishment of a classified board following the Proposed
Reincorporation would require the approval of the stockholders of Meridian
Delaware.
Indemnification and Limitation of Liability Meridian. California and
Delaware have similar laws respecting indemnification by a corporation of its
officers, directors, employees and other agents. The laws of both states also
permit, with certain exceptions, a corporation to adopt a provision in its
articles of incorporation or certificate of incorporation, as the case may be,
eliminating the liability of a director to the corporation or its shareholders
for monetary damages for breach of the director's fiduciary duty. There are
nonetheless certain differences between the laws of the two states respecting
indemnification and limitation of liability.
The Articles of Incorporation of Meridian California eliminate the
liability of directors to the corporation to the fullest extent permissible
under California law. California law does not permit the elimination of monetary
liability where such liability is based on: (a) intentional misconduct or
knowing and culpable violation of law; (b) acts or omissions that a director
believes to be contrary to the best interests of the corporation or its
shareholders, or that involve the absence of good faith on the part of the
director; (c) receipt of an improper personal benefit; (d) acts or omissions
that show reckless disregard for the director's duty to the corporation or its
shareholders, where the director in the ordinary course of performing a
director's duties should be aware of a risk of serious injury to the corporation
or its shareholders; (e) acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
corporation and its shareholders; (f) interested transactions between the
corporation and a director in which a director has a material financial
interest; and (g) liability for improper distributions, loans or guarantees.
The Certificate of Incorporation of Meridian Delaware also eliminates
the liability of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permissible under Delaware law, as such law exists currently or as it may be
amended in the future. Under Delaware law, such provision may not eliminate or
limit
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director monetary liability for (a) breaches of the director's duty of loyalty
to the corporation or its stockholders; (b) acts or omissions not in good faith
or involving intentional misconduct or knowing violations of law; (c) the
payment of unlawful dividends or unlawful stock repurchases or redemptions; or
(d) transactions in which the director received an improper personal benefit.
Such limitation of liability provisions also may not limit a director's
liability for violation of or otherwise relieve Meridian Delaware or its
directors from the necessity of complying with federal or state securities laws,
or affect the availability of non-monetary remedies such as injunctive relief or
rescission.
California law permits indemnification of expenses incurred in
derivative or third-party actions, except that with respect to derivative
actions (a) no indemnification may be made when a person is adjudged liable to
the corporation in the performance of that person's duty to the corporation and
its shareholders unless a court determines such person is entitled to indemnify
for expenses, and then such indemnification may be made only to the extent that
such court shall determine, and (b) no indemnification may be made without court
approval in respect of amounts paid or expenses incurred in settling or
otherwise disposing of a threatened or pending action or amounts incurred in
defending a pending action that is settled or otherwise disposed of without
court approval.
California law requires indemnification when the individual has
defended successfully the action on the merits (as opposed to Delaware law,
which requires indemnification relating to a successful defense on the merits or
otherwise).
Delaware law generally permits indemnification of expenses, including
attorney's fees, actually and reasonably incurred in the defense or settlement
of a derivative or third-party action, provided there is a determination by a
majority vote of a disinterested quorum of the directors, by independent legal
counsel or by a majority vote of a quorum of the stockholders that the person
seeking indemnification acted in good faith and in a manner reasonably believed
to be in or (in contrast to California law) not opposed to the best interests of
the corporation. Without court approval, however, no indemnification may be made
in respect of any derivative action in which such person is adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation. Delaware law requires indemnification of expenses when the
individual being indemnified has successfully defended any action, claim, issue,
or matter therein, on the merits or otherwise.
Expenses incurred by an officer or director in defending an action may
be paid in advance, under Delaware law and California law, if such director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
California law permits a California corporation to provide rights to
indemnification beyond those provided therein to the extent such additional
indemnification is authorized in the corporation's articles of incorporation.
Thus, if so authorized, rights to indemnification may be provided pursuant to
agreements or bylaw provisions that make mandatory the permissive
indemnification provided by California law. Under California law, there are two
limitations on such additional rights to indemnification: (i) such
indemnification is not permitted for acts, omissions or transactions from which
a director of a California corporation may not be relieved of personal liability
as described above and (ii) such indemnification is not permitted in
circumstances where California law expressly prohibits indemnification, as
described above. Meridian California's Articles of Incorporation permit
indemnification beyond that expressly mandated by the California Corporations
Code and limit director monetary liability to the extent permitted by California
law. Meridian California has entered into indemnification agreements with its
officers and directors.
Delaware law also permits a Delaware corporation to provide
indemnification in excess of that provided by statute. By contrast to California
law, Delaware law does not require authorizing provisions in the certificate of
incorporation and does not contain express prohibitions on indemnification in
certain circumstances. Limitations on indemnification may be imposed by a court,
however, based on principles of public policy.
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A provision of Delaware law states that the indemnification provided by
statute shall not be deemed exclusive of any other rights under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise. Under
Delaware law, therefore, the indemnification agreements entered into by Meridian
California with its officers and directors may be assumed by Meridian Delaware
upon completion of the Proposed Reincorporation. If the Proposed Reincorporation
is approved, the indemnification agreements will be amended to the extent
necessary to conform the agreements to Delaware law, and a vote in favor of the
Proposed Reincorporation is also approval of such amendments to the
indemnification agreements. In particular, the indemnification agreements will
be amended to include within their purview future changes in Delaware law that
expand the permissible scope of indemnification of directors and officers of
Delaware corporations.
Inspection of Shareholder List. Both California and Delaware law allow
any shareholder to inspect the shareholder list for a purpose reasonably related
to such person's interests as a shareholder. California law provides, in
addition, for an absolute right to inspect and copy the corporation's
shareholder list by persons holding an aggregate of five percent (5%) or more of
a corporation's voting shares, or shareholders holding an aggregate of one
percent (1%) or more of such shares who have filed a Schedule 14B under the
revised proxy rules. Under California law, such absolute inspection rights also
apply to a corporation formed under the laws of any other state if its principal
executive offices are in California or if it customarily holds meetings of its
board in California. Delaware law contains no provisions comparable to the
absolute right of inspection provided by California law to certain shareholders.
Dividends and Repurchases of Shares. California law dispenses with the
concepts of par value of shares as well as statutory definitions of capital,
surplus and the like. The concepts of par value, capital and surplus are
retained under Delaware law.
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchase of its
shares, other than repurchase of its shares issued under employee stock plans
contemplated by Section 408 of the California Corporations Code) unless either
(i) the corporation's retained earnings immediately prior to the proposed
distribution equal or exceed the amount of the proposed distribution or (ii)
immediately after giving effect to such distribution, the corporation's assets
(exclusive of goodwill, capitalized research and development expenses and
deferred charges) would be at least equal to 13 times its Liabilities (not
including deferred taxes, deferred income and other deferred credits), and the
corporation's current assets would be at least equal to its current liabilities
(or 13 times its current liabilities if the average pre-tax and pre-interest
expense earnings for the preceding two fiscal years were less than the average
interest expense for such years). Such tests are applied to California
corporations on a consolidated basis.
Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired and such redemption or repurchase would not impair
the capital of the corporation.
To date, the Company has not paid any cash dividends.
Shareholder Voting. Both California and Delaware law generally require
that a majority of the shareholders of both acquiring and target corporations
approve statutory mergers. Delaware law does not require a stockholder vote of
the surviving corporation in a merger (unless the corporation provides otherwise
in its certificate of incorporation) if (a) the merger agreement does not amend
the existing certificate of incorporation, (b) each share of the stock of the
surviving corporations outstanding immediately before the effective date of the
merger is an identical outstanding of treasury share after the merger, and (c)
either no shares of common stock of the surviving corporation and no shares,
securities or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of common stock of the surviving corporation to be issued or
delivered under the plan of merger plus those initially issuable upon conversion
of any
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other shares, securities or obligations to be issued or delivered under such
plan do not exceed twenty percent (20%) of the shares of common stock of such
constituent corporation outstanding immediately prior to the effective date of
the merger. California law contains a similar exception to its voting
requirements for reorganizations where shareholders of the corporation itself,
or both, immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than five sixths of the
voting power of the surviving or acquiring corporation or its parent entity.
Both California law and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the outstanding voting shares of the corporation transferring such assets.
With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets, and similar transactions be approved
by a majority vote of each class of shares outstanding. In contrast, Delaware
law generally does not require class voting, except in certain transactions
involving an amendment to the certificate of incorporation that adversely
affects a specific class of shares. As a result, shareholder approval, of such
transactions may be easier to obtain under Delaware law for companies which have
more than one class of shares outstanding.
California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than fifty percent (50%) but less than ninety percent (90%) of
such common stock or its affiliate unless all of the holders of such common
stock consent to the transaction. This provision of California law may have the
effect of making a "cash-out" merger by a majority shareholder more difficult to
accomplish. Although Delaware law does not parallel California law in this
respect, under some circumstances Section 203 does provide similar protection
against coercive two-tiered bids for a corporation in which the stockholders are
not treated equally. See "Significant Differences Between the Corporation Laws
of California and Delaware - Stockholder Approval of Certain Business
Combinations."
California law provides that except in certain circumstances when a
tender offer or a proposal for a reorganization or for a sale of assets is made
by an interested party (generally a controlling or managing person of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation that does not
have shares held of record by at least 100 persons, or to a transaction that has
been qualified under California state securities laws. Furthermore, if a tender
of shares or vote is sought pursuant to an interested party's proposal and a
later proposal is made by another party at least ten days prior to the date of
acceptance of the interested party proposal, the shareholders must be informed
of the later offer and be afforded a reasonable opportunity to withdraw any
vote, consent or proxy, or to withdraw any tendered shares. Delaware law has no
comparable provision.
Interested Director Transactions. Under both California and Delaware
law, certain contracts or transactions in which one or more of a corporation's
directors has an interest are not void or voidable because of such interest
provided that certain conditions, such as obtaining the required approval and
fulfilling the requirements of good faith and full disclosure, are met. With
certain exceptions, the conditions are similar under California and Delaware
law. Under California and Delaware law, (a) either the shareholders or the board
of directors must approve any such contract or transaction after full disclosure
of the material facts, and, in the case of board approval, the contract or
transaction must also be "just and reasonable" (in California) or "fair" (in
Delaware) to the corporation, or (b) the contract or transaction must have been
just and reasonable or fair as to the corporation at the time it was approved.
In the latter case, California law explicitly places the burden of proof on the
interested director. Under California law, if shareholder approval is sought,
the interested director is not entitled to vote his shares at a shareholder
meeting with respect to any action regarding such contract or transaction. If
board approval is sought, the contract or transaction must be approved by a
majority vote of a quorum of the directors, without counting the vote of any
interested directors (except that interested directors may be counted for
purposes of establishing a quorum). Therefore, certain transactions that the
Board of Directors of Meridian California might not be able to approve because
of the number of interested directors, could be approved by a majority of the
disinterested directors of Meridian Delaware, although less than a majority of a
quorum. The Company is not aware of any plans to propose any transaction
involving directors of the Company that could not be so approved under
California law but could be so approved under Delaware law.
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Shareholder Derivative Suits. California law provides that a
shareholder bringing a derivative action on behalf of a corporation need not
have been a shareholder at the time of the transaction in question, provided
that certain tests are met. Under Delaware law, a stockholder may bring a
derivative action on behalf of the corporation only if the stockholder was a
stockholder of the corporation at the time of the transaction in question or if
his or her stock thereafter devolved upon him or her by operation of law.
California law also provides that the corporation or the defendant in a
derivative suit may make a motion to the court for an order requiring the
plaintiff shareholder to furnish a security bond. Delaware does not have a
similar bonding requirement.
Appraisal Rights. Under both California and Delaware law, a shareholder
of a corporation participating in certain major corporate transactions may,
under varying circumstances, be entitled to appraisal rights pursuant to which
such shareholder may receive cash in the amount of the fair market value of his
or her shares in lieu of the consideration he or she would otherwise receive in
the transaction. Under Delaware law, such fair market value is determined
exclusive of any element of value arising from the accomplishment or expectation
of the merger or consolidation, and such appraisal rights are not available (a)
with respect to the sale, lease or exchange of all or substantially all of the
assets of a corporation, (b) with respect to a merger or consolidation by a
corporation the shares of which are either listed on a national securities
exchange or are held of record by more than 2,000 holders if such stockholders
receive only shares of the surviving corporation or shares of any other
corporation that are either listed on a national securities exchange or held of
record by more than 2,000 holders, plus cash in lieu of fractional shares of
such corporations, or (c) to stockholders of a corporation surviving a merger if
no vote of the stockholders of the surviving corporation is required to approve
the merger under certain provisions of Delaware law.
The limitations on the availability of appraisal rights under
California law are different from those under Delaware law. Shareholders of a
California corporation whose shares are listed on a national securities exchange
or on a list of over-the-counter margin stocks issued by the Board of Governors
of the Federal Reserve System generally do not have such appraisal rights unless
the holders of at least five percent (5%) of the class of outstanding shares
claim the right of the corporation or any law restricts the transfer of such
shares. Appraisal rights are also unavailable if the shareholders of a
corporation or the corporation itself, or both, immediately prior to the
reorganization will own immediately after the reorganization equity securities
constituting more than five-sixths of the voting power of the surviving or
acquiring corporation or its parent entity (as will be the case in the
Reincorporation Proposal). Appraisal or dissenters' rights are, therefore, not
available to shareholders of Meridian California with respect to the
Reincorporation Proposal. California law generally affords appraisal rights in
sale or asset reorganizations.
Dissolution. Under California law, shareholders holding fifty percent
(50%) or more of the total voting power may authorize a corporation's
dissolution, with or without the approval of the corporation's board of
directors, and this right may not be modified by the articles of incorporation.
Under Delaware law, unless the board of directors approves the proposal to
dissolve, the dissolution must be approved by all the stockholders entitled to
vote thereon. Only if the dissolution is initially approved by the board of
directors may it be approved by a simple majority of the outstanding shares of
the corporation's stock entitled to vote. In the event of such a board-initiated
dissolution, Delaware law allows a Delaware corporation to include in its
certificate of incorporation a supermajority (greater than a simple majority)
voting requirement in connection with dissolutions. Meridian Delaware's
Certificate of Incorporation contains no such supermajority requirement,
however, and a majority of the outstanding shares entitled to vote, voting at a
meeting at which a quorum is present, would be sufficient to approve a
dissolution of Meridian Delaware that had previously been approved-by its Board
of Directors.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain federal income tax
considerations that may be relevant to holders of Meridian California Common
Stock who receive Meridian Delaware Common Stock in exchange for their Meridian
California Common Stock as a result of the Proposed Reincorporation. The
discussion does not address all of the tax consequences of the Proposed
Reincorporation that may be relevant to particular Meridian California
shareholders, such as dealers in securities, or those Meridian California
shareholders who acquired their shares upon the exercise of stock options, nor
does it address the tax consequences to holders of options or warrants to
acquire Meridian California Common Stock. Furthermore, no foreign, state, or
local tax considerations are addressed herein. In view of the varying nature of
such tax consequences, each shareholder is
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urged to consult his or her own tax advisor as to the specific tax consequences
of the proposed reincorporation, including the applicability of federal, state,
local or foreign tax laws.
Subject to the limitations, qualifications and exceptions described
herein, and assuming the Proposed Reincorporation qualifies as a reorganization
within the meaning of Section 368 (a) of the Code, the following tax
consequences generally should result:
(a) No gain or loss should be recognized by holders of Meridian
California Common Stock upon receipt of Meridian Delaware Common Stock
pursuant to the Proposed Reincorporation;
(b) The aggregate tax basis of the Meridian Delaware Common Stock
received by each shareholder in the Proposed Reincorporation should be
equal to the aggregate tax basis of the Meridian California Common
Stock surrendered in exchange therefor; and
(c) The holding period of the Meridian Delaware Common Stock received
by each shareholder of Meridian California should include the period
for which such shareholder held the Meridian California Common Stock
surrendered in exchange therefor, provided that such Meridian
California Common Stock was held by the shareholder as a capital asset
at the time of Proposed Reincorporation.
The Company has not requested a ruling from the Internal Revenue
Service (the "IRS") with respect to the federal income tax consequences of the
Proposed Reincorporation under the Code. The Company will, however, receive an
opinion from its legal counsel, Wilson Sonsini Goodrich & Rosati, Professional
Corporation, substantially to the effect that the Proposed Reincorporation will
qualify as a reorganization within the meaning of Section 368(a) of the Code
(the "Tax Opinion"). The Tax Opinion will neither bind the IRS nor preclude it
from asserting a contrary position. In addition, the Tax Opinion will be subject
to certain assumptions and qualifications and will be based upon the truth and
accuracy of representations made by Meridian Delaware and Meridian California.
Of particular importance will be assumptions and representations relating to the
requirement (the "continuity of interest" requirement) that the shareholders of
Meridian California retain, through ownership of Meridian Delaware stock, a
significant equity interest in Meridian California's business after the Proposed
Reincorporation.
A successful IRS challenge to the reorganization status of the Proposed
Reincorporation (in consequence of a failure to satisfy the "continuity of
interest" requirement or otherwise) would result in a shareholder recognizing
gain or loss with respect to each share of Meridian California Common Stock
exchanged in the Proposed Reincorporation equal to the difference between the
shareholder's basis in such share and the fair market value, as of the time of
the Proposed Reincorporation, of the Meridian Delaware Common Stock received in
exchange therefor. In such event, a shareholder's aggregate basis in the shares
of Meridian Delaware Common Stock received in the exchange would equal their
fair market value on such date, and the shareholder's holding period for such
shares would not include the period during which the shareholder held Meridian
California Common Stock. Even if the Proposed Reincorporation qualifies as a
reorganization under the Code, a shareholder would recognize gain to the extent
the shareholder received (actually or constructively) consideration other than
Meridian Delaware Common Stock in exchange for the shareholder's Meridian
California Common Stock.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the Reincorporation Proposal, which will also constitute
approval of the (i) Merger Agreement. the Certificate of Incorporation and the
Bylaws of Delaware, (ii) the assumption of Meridian California's employee
benefit plans and outstanding stock options by Meridian Delaware, and (iii)
revisions in the Company's indemnification agreements with its officers and
directors to conform those agreements to Delaware law, will require the
affirmative vote of the holders of a majority of the Votes Cast.
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THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THIS PROPOSAL. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT OF A VOTE AGAINST
THE REINCORPORATION PROPOSAL.
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PROPOSAL NO. 5:
CONFIRMATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the financial statements of the Company for the 1997
fiscal year and recommends that the shareholders confirm such selection. This
firm has audited the Company's financial statements since fiscal 1992. In the
event of a negative vote, the Board of Directors will reconsider its selection.
Representatives of Price Waterhouse LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, the persons named in the
accompanying form of proxy will vote the shares represented by proxy as the
Board may recommend or as the proxy holders, acting in their sole discretion,
may determine.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals to be presented by shareholders of the Company at the 1998
Annual Meeting must be received by the Company no later than November 21, 1997
in order that they may be included in the proxy statement and form of proxy
relating to that meeting.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31,1996, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF
EXHIBITS. REQUESTS SHOULD BE SENT TO SHAREHOLDER RELATIONS, MERIDIAN DATA, INC.,
5615 SCOTTS VALLEY ROAD, SUITE 200, SCOTTS VALLEY, CALIFORNIA 95066.
THE BOARD OF DIRECTORS
Dated: April 23, 1997.
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EXHIBIT A
MERIDIAN DATA, INC.
1997 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
. to attract and retain the best available personnel for
positions of substantial responsibility,
. to provide additional incentive to Employees, Directors and
Consultants, and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a committee of Directors appointed by
the Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Meridian Data, Inc., a California
corporation.
(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
(i) "Director" means a member of the Board.
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(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
A Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between locations of
the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for 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 Administrator deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "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.
(o) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
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(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(q) "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.
(r) "Option" means a stock option granted pursuant to the
Plan.
(s) "Option Agreement" means an agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(t) "Option Exchange Program" means a program whereby
outstanding Options are surrendered in exchange for Options with a lower
exercise price.
(u) "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1997 Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or
Consultant.
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(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section
13 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is nine hundred thousand (900,000) Shares. The Shares may
be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated); provided, however, that Shares that have actually
been issued under the Plan, whether upon exercise of an Option or Right, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of
Service Providers.
(ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted
hereunder as "performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a Committee of two or
more "outside directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided
above, the Plan shall be administered by (A) the Board or (B) a Committee,
which committee shall be constituted to satisfy Applicable Laws.
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(b) Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options
and Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right of the shares of Common
Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or
Stock Purchase Right to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options
longer than is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld.
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The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined. All elections
by an Optionee to have Shares withheld for this purpose shall be made in such
form and under such conditions as the Administrator may deem necessary or
advisable;
(xii) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon an Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of
Options:
(i) No Service Provider shall be granted, in any
fiscal year of the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional
500,000 Shares which shall not count against the limit set forth in
subsection (i) above.
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(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 13.
(iv) If an Option is cancelled in the same fiscal year
of the Company in which it was granted (other than in connection with a
transaction described in Section 13), the cancelled Option will be counted
against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 15 of the
Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided
in the Option Agreement. Moreover, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years from
the date of grant or such shorter term as may be provided in the Option
Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by
the Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110%
of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the Administrator. In the case
of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
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(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied before
the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant.
Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms of the
Plan and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement. Unless the Administrator
provides otherwise, vesting of Options granted hereunder shall be tolled during
any unpaid leave of absence. An Option may not be exercised for a fraction of
a Share.
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An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and his
or her spouse. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for
a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement to the extent that the Option
is vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months following the Optionee's termination. If, on
the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later
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than the expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee's estate or by a person who acquires the right to
exercise the Option by bequest or inheritance, but only to the extent that the
Option is vested on the date of death. In the absence of a specified time in
the Option Agreement, the Option shall remain exercisable for twelve (12)
months following the Optionee's termination. If, at the time of death, the
Optionee is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall immediately revert to the Plan. The
Option may be exercised by the executor or administrator of the Optionee's
estate or, if none, by the person(s) entitled to exercise the Option under the
Optionee's will or the laws of descent or distribution. If the Option is not
so exercised within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares an Option previously granted
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to
be paid, and the time within which the offeree must accept such offer. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement
in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 13 of the Plan.
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12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Optionee, only by the Optionee.
If the Administrator makes an Option or Stock Purchase Right transferable, such
Option or Stock Purchase Right shall contain such additional terms and
conditions as the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option and Stock Purchase Right, and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee
to have the right to exercise his or her Option until ten (10) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option or Stock Purchase Right shall
lapse as to all such Shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has
not been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the
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<PAGE> 45
Optionee shall fully vest in and have the right to exercise the Option or Stock
Purchase Right as to all of the Optioned Stock, including Shares as to which it
would not otherwise be vested or exercisable. If an Option or Stock Purchase
Right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully vested and exercisable for a period of fifteen
(15) days from the date of such notice, and the Option or Stock Purchase Right
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
or Stock Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon
the exercise of the Option or Stock Purchase Right, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right, to be solely common stock
of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the merger or
sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain
shareholder approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
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<PAGE> 46
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the
exercise of an Option or Stock Purchase Right, the Company may require the
person exercising such Option or Stock Purchase Right to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.
17. Inability to Obtain Authority. The 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.
18. 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.
19. Shareholder Approval. The Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the manner and
to the degree required under Applicable Laws.
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EXHIBIT B
AGREEMENT AND PLAN OF MERGER
OF MERIDIAN DATA, INC.
A DELAWARE CORPORATION
AND
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of _________, 1997, (the
"Agreement") is between Meridian Data, Inc., a Delaware corporation
("MDI-Delaware") and Meridian Data, Inc., a California corporation
("MDI-California"). MDI-Delaware and MDI-California are sometimes referred to
herein as the "Constituent Corporations."
R E C I T A L S
A. MDI-Delaware is a corporation duly organized and existing
under the laws of the State of Delaware and has an authorized capital of
40,000,000 shares, 35,000,000 of which are designated "Common Stock," $.001 par
value and 5,000,000 of which are designated "Preferred Stock", $.001 par value.
As of the date of this Agreement of Merger, 1,000 shares of Common Stock were
issued and outstanding, all of which were held by MDI-California. No shares of
Preferred Stock were outstanding.
B. MDI-California is a corporation duly organized and existing
under the laws of the State of California and has an authorized capital of
35,000,000 shares, designated "Common Stock", no par value. As of the date of
this Agreement of Merger, ___________ shares of Common Stock were issued and
outstanding.
C. The Board of Directors of MDI-California has determined that,
for the purpose of effecting the reincorporation of MDI-California in the
State of Delaware, it is advisable and in the best interests of MDI-California
that MDI-California merge with and into MDI-Delaware upon the terms and
conditions herein provided.
D. The respective Boards of Directors of MDI-Delaware and
MDI-California have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective stockholders and executed
by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, MDI-Delaware and MDI-California hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 Merger. In accordance with the provisions of this Agreement,
the Delaware General Corporation Law and the California General Corporation
Law, MDI-California shall be merged with and into MDI-Delaware (the "Merger"),
the separate existence of MDI-California shall cease and
<PAGE> 48
MDI-Delaware shall be, and is herein sometimes referred as, the "Surviving
Corporation", and the name of the Surviving Corporation shall be Meridian Data,
Inc.
1.2 Filing and Effectiveness. The Merger shall become effective
when the following actions shall have been completed:
(a) This Agreement and Merger shall have been adopted and
approved by the stockholders of each Constituent Corporation in accordance with
the requirements of the Delaware General Corporation Law and the California
General Corporation Law;
(b) All of the conditions precedent to the consummation
of the Merger specified in this Agreement shall have been satisfied or duly
waived by the party entitled to satisfaction thereof;
(c) An executed Agreement and Plan of Merger meeting the
requirements of the Delaware General Corporation Law shall have been filed with
the Secretary of State of the State of Delaware; and
The date and time when the Merger shall become effective, as
aforesaid, is herein called the "Effective Date of the Merger."
1.3 Effect of the Merger. Upon the Effective Date of the Merger,
the separate existence of MDI-California shall cease and MDI-Delaware, as the
Surviving Corporation, (i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger, (ii) shall be subject to all actions previously taken by its and
MDI-California's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of MDI-California
in the manner more fully set forth in Section 259 of the Delaware General
Corporation Law, (iv) shall continue to be subject to all of the debts,
liabilities and obligations of MDI-Delaware as constituted immediately prior to
the Effective Date of the Merger, and (v) shall succeed, without other
transfer, to all of the debts, liabilities and obligations of MDI-California in
the same manner as if MDI-Delaware had itself incurred them, all as more fully
provided under the applicable provisions of the Delaware General Corporation
Law and the California Corporations Code.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation. The Certificate of
Incorporation of MDI-Delaware as in effect immediately prior to the Effective
Date of the Merger shall continue in full force and effect as the Certificate
of Incorporation of the Surviving Corporation until duly amended in accordance
with the provisions thereof and applicable law.
2.2 Bylaws. The Bylaws of MDI-Delaware as in effect immediately
prior to the Effective Date of the Merger shall continue in full force and
effect as the Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
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<PAGE> 49
2.3 Directors and Officers. The directors and officers of
MDI-California immediately prior to the Effective Date of the Merger shall be
the directors and officers of the Surviving Corporation until their successors
shall have been duly elected and qualified or until as otherwise provided by
law, the Certificate of Incorporation of the Surviving Corporation or the
Bylaws of the Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 MDI-California Common Shares. Upon the Effective Date of the
Merger, each share of MDI-California Common Stock, no par value, issued and
outstanding immediately prior thereto shall by virtue of the Merger and without
any action by the Constituent Corporations, the holder of such shares or any
other person, be converted into and exchanged for one fully paid and
nonassessable share of Common Stock, no par value, of the Surviving
Corporation. No fractional share interests of Surviving Corporation Common
Stock shall be issued. In lieu thereof, any fractional share interests to
which a holder would otherwise be entitled shall be aggregated.
3.2 MDI-California Options, Stock Purchase Rights and Convertible
Securities.
(a) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume the obligations of MDI-California under, and continue,
the option plans (including without limitation the 1987 Incentive Stock Plan,
the 1988 Incentive Stock Plan, the 1992 Incentive Stock Plan, the 1992 Key
Employee Stock Plan, the 1992 Employee Stock Purchase Plan, the 1995 Director
Plan and all other employee benefit plans of MDI-California. Each outstanding
and unexercised option, other right to purchase, or security convertible into,
MDI-California Common Stock (a "Right") shall become, subject to the provisions
in paragraph (c) hereof, an option, right to purchase or a security convertible
into the Surviving Corporation's Common Stock on the basis of one share of the
Surviving Corporation's Common Stock for each one share of MDI-California
Common Stock issuable pursuant to any such Right, on the same terms and
conditions and at an exercise price equal to the exercise price applicable to
any such MDI-California Right at the Effective Date of the Merger. This
paragraph 3.2(a) shall not apply to MDI-California Common Stock. Such Common
Stock is subject to paragraph 3.1.
(b) A number of shares of the Surviving Corporation's
Common Stock shall be reserved for issuance upon the exercise of options, stock
purchase rights and convertible securities equal to the number of shares of
MDI-California Common Stock so reserved immediately prior to the Effective Date
of the Merger.
(c) The assumed Rights shall not entitle any holder
thereof to a fractional share upon exercise or conversion. In addition, no
"additional benefits" (within the meaning of Section 424(a)(2) of the Internal
Revenue Code of 1986, as amended) shall be accorded to the optionees pursuant
to the assumption of their options.
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<PAGE> 50
3.3 MDI-Delaware Common Stock. Upon the Effective Date of the
Merger, each share of Common Stock, $.001 par value, of MDI- Delaware issued
and outstanding immediately prior thereto shall, by virtue of the Merger and
without any action by MDI-Delaware, the holder of such shares or any other
person, be cancelled and returned to the status of authorized but unissued
shares.
3.4 Exchange of Certificates. After the Effective Date of the
Merger, each holder of an outstanding certificate representing shares of
MDI-California Common Stock may be asked to surrender the same for cancellation
to First National Bank of California (the "Exchange Agent"), and each such
holder shall be entitled to receive in exchange therefor a certificate or
certificates representing the number of shares of the Surviving Corporation's
Common Stock, as the case may be, into which the surrendered shares were
converted as herein provided. Until so surrendered, each outstanding
certificate theretofore representing shares of MDI-California Common Stock
shall be deemed for all purposes to represent the number of shares of the
Surviving Corporation's Common Stock, respectively, into which such shares of
MDI-California Common Stock, as the case may be, were converted in the Merger.
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion
or otherwise accounted for to the Surviving Corporation or the Exchange Agent,
have and be entitled to exercise any voting and other rights with respect to
and to receive dividends and other distributions upon the shares of Common
Stock of the Surviving Corporation represented by such outstanding certificate
as provided above.
Each certificate representing Common Stock of the Surviving
Corporation so issued in the Merger shall bear the same legends, if any, with
respect to the restrictions on transferability as the certificates of
MDI-California so converted and given in exchange therefore, unless otherwise
determined by the Board of Directors of the Surviving Corporation in compliance
with applicable laws.
If any certificate for shares of the Surviving Corporation's stock is
to be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and comply
with applicable securities laws and that the person requesting such transfer
pay to the Exchange Agent any transfer or other taxes payable by reason of
issuance of such new certificate in a name other than that of the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not payable.
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<PAGE> 51
IV. GENERAL
4.1 Covenants of MDI-Delaware. MDI-Delaware covenants and agrees
that it will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in
the State of California and in connection therewith irrevocably appoint an
agent for service of process as required under the provisions of Section 2105
of the California General Corporation Law.
(b) File any and all documents with the California
Franchise Tax Board necessary for the assumption by MDI-Delaware of all of the
franchise tax liabilities of MDI-California.
(c) Take such other actions as may be required by the
California General Corporation Law.
4.2 Further Assurances. From time to time, as and when required
by MDI-Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of MDI-California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other actions
as shall be appropriate or necessary in order to vest or perfect in or conform
of record or otherwise by MDI-Delaware the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of MDI- California and otherwise to carry out the purposes of
this Agreement, and the officers and directors of MDI-Delaware are fully
authorized in the name and on behalf of MDI-California or otherwise to take any
and all such action and to execute and deliver any and all such deeds and other
instruments.
4.3 Abandonment. At any time before the Effective Date of the
Merger, this Agreement may be terminated and the Merger may be abandoned for
any reason whatsoever by the Board of Directors of either MDI-California or of
MDI-Delaware, or of both, notwithstanding the approval of this Agreement by the
shareholders of MDI-California or by the sole stockholder of MDI-Delaware, or
by both.
4.4 Amendment. The Boards of Directors of the Constituent
Corporations may amend this Agreement at any time prior to the filing of this
Agreement (or certificate in lieu thereof) with the Secretary of State of the
States of California and Delaware, provided that an amendment made subsequent
to the adoption of this Agreement by the stockholders of either Constituent
Corporation shall not: (1) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of such
Constituent Corporation, (2) alter or change any term of the Certificate of
Incorporation of the Surviving Corporation to be effected by the Merger, or (3)
alter or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of any class or series
of capital stock of any Constituent Corporation.
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<PAGE> 52
4.5 Registered Office. The registered office of the Surviving
Corporation in the State of Delaware is 1209 Orange Street, Wilmington, County
of New Castle, DE 19801 and The Corporation Trust Company is the registered
agent of the Surviving Corporation at such address.
4.6 Agreement. Executed copies of this Agreement will be on file
at the principal place of business of the Surviving Corporation at 5615 Scotts
Valley Drive, Scotts Valley, CA 95066 and copies thereof will be furnished to
any stockholder of either Constituent Corporation, upon request and without
cost.
4.7 Governing Law. This Agreement shall in all respects be
construed, interpreted and enforced in accordance with and governed by the laws
of the State of Delaware and, so far as applicable, the merger provisions of
the California General Corporation Law.
4.8 FIRPTA Notification. (a) On the Effective Date of the
Merger, MDI-California shall deliver to MDI-Delaware, as agent for the
shareholders of MDI-California, a properly executed statement (the "Statement")
substantially in the form attached hereto as Exhibit A. MDI-Delaware shall
retain the Statement for a period of not less than seven years and shall, upon
request, provide a copy thereof to any person that was a shareholder of
MDI-California immediately prior to the Merger. In consequence of the approval
of the Merger by the shareholders of MDI-California, (i) such shareholders
shall be considered to have requested that the Statement be delivered to
MDI-Delaware as their agent and (ii) MDI-Delaware shall be considered to have
received a copy of the Statement at the request of the MDI-California
shareholders for purposes of satisfying MDI-Delaware's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
(b) MDI-California shall deliver to the Internal Revenue Service a
notice regarding the Statement in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2).
4.9 Counterparts. In order to facilitate the filing and recording
of this Agreement, the same may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
[Remainder of page intentionally left blank]
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<PAGE> 53
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of MDI-Delaware and MDI-California is
hereby executed on behalf of each of such two corporations and attested by
their respective officers thereunto duly authorized.
MERIDIAN DATA, INC.
a Delaware corporation
By: _______________________________
Gianluca U. Rattazzi, President
and Chief Executive Officer
ATTEST:
__________________________
Mario M. Rosati, Secretary
MERIDIAN DATA, INC.
a California corporation
By: _______________________________
Gianluca U. Rattazzi, President
and Chief Executive Officer
ATTEST:
__________________________
Mario M. Rosati, Secretary
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<PAGE> 54
EXHIBIT B-1
__________, 1997
TO THE SHAREHOLDERS OF MERIDIAN DATA, INC.:
In connection with the reincorporation (the "Reincorporation") in
Delaware of Meridian Data, Inc., a California corporation (the "Company"),
pursuant to the Agreement and Plan of Merger (the "Agreement") dated as of
__________, 1997 between the Company and Meridian Data, Inc., a Delaware
corporation and wholly-owned subsidiary of the Company ("MDI-Delaware"), your
shares of Company stock will be replaced by shares of stock in MDI-Delaware.
In order to establish that (i) you will not be subject to tax under
Section 897 of the Internal Revenue Code of 1986, as amended (the "Code"), in
consequence of the Reincorporation and (ii) MDI-Delaware will not be required
under Section 1445 of the Code to withhold taxes from the MDI-Delaware stock
that you will receive in connection therewith, the Company hereby represents to
you that, as of the date of this letter, shares of Company stock do not
constitute a "United States real property interest" within the meaning of
Section 897(c) of the Code and the regulations issued thereunder.
A copy of this letter will be delivered to MDI-Delaware pursuant to
Section 4.8 of the Agreement.
Under penalties of perjury, the undersigned officer of the Company
hereby declares that, to the best knowledge and belief of the undersigned, the
facts set forth herein are true and correct.
Sincerely,
__________________________________
Gianluca U. Rattazzi, President and
Chief Executive Officer
<PAGE> 55
Officer's Certificates of MDI-CA and MDI-Delaware.
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<PAGE> 56
EXHIBIT C
CERTIFICATE OF INCORPORATION
OF
MERIDIAN DATA, INC.
ARTICLE I
The name of the corporation is Meridian Data, Inc. (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of shares of stock
to be designated, respectively, Common Stock, $0.001 par value, and Preferred
Stock, $0.001 par value. The total number of shares that the Corporation is
authorized to issue is 40,000,000 shares. The number of shares of Common Stock
authorized is 35,000,000. The number of shares of Preferred authorized is
5,000,000.
The Preferred Stock may be issued from time to time in one or more
series pursuant to a resolution or resolutions providing for such issue duly
adopted by the board of directors (authority to do so being hereby expressly
vested in the board). The board of directors is further authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of Preferred Stock and to fix the
number of shares of any series of Preferred Stock and the designation of any
such series of Preferred Stock. The board of directors, within the limits and
restrictions stated in any resolution or resolutions of the board of directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares in any such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
<PAGE> 57
The authority of the board of directors with respect to each such
class or series shall include, without limitation of the foregoing, the right
to determine and fix:
(a) the distinctive designation of such class or
series and the number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of
such class or series shall be declared and paid, or set aside for payment,
whether dividends at the rate so determined shall be cumulative or accruing,
and whether the shares of such class or series shall be entitled to any
participating or other dividends in addition to dividends at the rate so
determined, and if so, on what terms;
(c) the right or obligation, if any, of the
corporation to redeem shares of the particular class or series of Preferred
Stock and, if redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and
preferences, if any, and the amount or amounts per share, which the shares of
such class or series of Preferred Stock shall be entitled to receive upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(e) the terms and conditions, if any, upon which
shares of such class or series shall be convertible into, or exchangeable for,
shares of capital stock of any other class or series, including the price or
prices or the rate or rates of conversion or exchange and the terms of
adjustment, if any;
(f) the obligation, if any, of the corporation to
retire, redeem or purchase shares of such class or series pursuant to a sinking
fund or fund of a similar nature or otherwise, and the terms and conditions of
such obligation;
(g) voting rights, if any, on the issuance of
additional shares of such class or series or any shares of any other class or
series of Preferred Stock;
(h) limitations, if any, on the issuance of
additional shares of such class or series or any shares of any other class or
series of Preferred Stock; and
(i) such other preferences, powers,
qualifications, special or relative rights and privileges thereof as the board
of directors of the corporation, acting in accordance with this Restated
Certificate of Incorporation, may deem advisable and are not inconsistent with
law and the provisions of this Restated Certificate of Incorporation.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
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<PAGE> 58
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by
the General Corporation Law of the State of Delaware as the same exists or as
may hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to an
action or proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that such person or his or her testator or intestate is
or was a director, officer or employee of the Corporation, or any predecessor
of the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article
VII, nor the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII, in respect of any matter occurring, or any action
or proceeding accruing or arising or that, but for this Article VII, would
accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be re-issuable by the Corporation.
ARTICLE IX
Holders of stock of any series of this corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting
is required pursuant to Sections 2115 and/or 301.5 of the California
Corporations Code, in which event each such holder shall be entitled to as many
votes as shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and the holder may cast all of such votes for a
single director or may distribute them among the number of directors to be
voted for, or for any two or more of them as such holder may see fit, so long
as the name of the candidate for director shall have been placed in nomination
prior to the voting and the stockholder, or any other holder of the same class
or series of stock, has given notice at the meeting prior to the voting of the
intention to cumulate votes.
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ARTICLE X
1. Number of Directors. The number of directors which
constitutes the whole Board of Directors of the corporation shall be designated
in the Bylaws of the corporation.
2. Election of Directors. Elections of directors need not be by
written ballot unless the Bylaws of the corporation shall so provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend
or repeal the Bylaws of the corporation.
ARTICLE XII
No action shall be taken by the stockholders of the corporation except
at an annual or special meeting of the stockholders called in accordance with
the Bylaws of the corporation, and no action shall be taken by the stockholders
by written consent.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE XIV
The name and mailing address of the incorporator are:
William B. Owens, Jr., Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
* * *
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The undersigned incorporator hereby acknowledges that the above
Certificate of Incorporation of Meridian Data, Inc., is his act and deed and
that the facts stated therein are true.
----------------------------
Dated: _______________, 1997 William B. Owens, Jr.
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EXHIBIT D
BYLAWS
OF
MERIDIAN DATA, INC.
(a Delaware Corporation)
<PAGE> 62
BYLAWS OF
MERIDIAN DATA, INC.
(a Delaware Corporation)
TABLE OF CONTENTS
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ARTICLE I - CORPORATE OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 REGISTERED OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 PLACE OF MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 NOTIFICATIONS OF NOMINATIONS AND PROPOSED BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 ADJOURNED MEETING; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III - DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 NUMBER OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 RESIGNATION AND VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 NOTICE OF ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.13 FEES AND COMPENSATION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 APPROVAL OF LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 MEETINGS AND ACTION OF COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 COMMITTEE MINUTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 REMOVAL AND RESIGNATION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 VACANCIES IN OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 VICE PRESIDENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10 CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND
OTHER AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 INDEMNIFICATION OF OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII - RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 MAINTENANCE AND INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 INSPECTION BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 ANNUAL STATEMENT TO STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 CERTIFICATION AND INSPECTION OF BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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(Continued)
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ARTICLE VIII - GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 SPECIAL DESIGNATION ON CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 TRANSFER AGENTS AND REGISTRARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.8 CONSTRUCTION; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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<PAGE> 65
BYLAWS
OF
MERIDIAN DATA, INC.
(a Delaware Corporation)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the third
Tuesday of May in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted.
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2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the
general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the chairman of the board, the president, any vice
president or the secretary of the corporation. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of these
bylaws, that a meeting will be held at the time requested by the person or
persons calling the meeting, so long as that time is not less than thirty-five
(35) nor more than sixty (60) days after the receipt of the request. If the
notice is not given within twenty (20) days after receipt of the request, then
the person or persons requesting the meeting may give the notice. Nothing
contained in this paragraph of this Section 2.3 shall be construed as limiting,
fixing or affecting the time when a meeting of stockholders called by action of
the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 2.6 of these bylaws not less than ten (10)
(or, if sent by third-class mail pursuant to Section 2.6 of these bylaws,
thirty (30)) nor more than sixty (60) days before the date of the meeting. The
notice shall specify the place, date, and hour of the meeting and (i) in the
case of a special meeting, the general nature of the business to be transacted
(no business other than that specified in the notice may be transacted) or (ii)
in the case of the annual meeting, those matters which the board of directors,
at the time of giving the notice, intends to present for action by the
stockholders (but subject to the provisions of the next paragraph of this
Section 2.4 any proper matter may be presented at the meeting for such action).
The notice of any meeting at which directors are to be elected shall include
the name of any nominee or nominees who, at the time of the notice, the board
intends to present for election.
2.5 NOTIFICATIONS OF NOMINATIONS AND PROPOSED BUSINESS.
Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
(a) nominations for the election of directors, and
(b) business proposed to be brought before any stockholder
meeting
may be made by the Board of Directors or proxy committee appointed by the Board
of Directors or by any stockholder entitled to vote in the election of
directors generally if such nomination or business proposed is otherwise proper
business before such meeting. However, any such stockholder may
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nominate one or more persons for election as directors at a meeting or propose
business to be brought before a meeting, or both, only if such stockholder has
given timely notice in proper written form of his intent to make such
nomination or nominations or to propose such business. To be timely, such
stockholder's notice must be delivered to or mailed and received by the
Secretary of the corporation not less than thirty- five (35) days nor more than
sixty (60) days prior to the meeting; provided, however, that in the event that
less than forty-five (45) days notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth
day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. To be in proper form, a
stockholder's notice to the Secretary shall set forth:
(i) the name and address of the stockholder who
intends to make the nominations or propose the business and,
as the case may be, of the person or persons to be nominated
or of the business to be proposed;
(ii) a representation that the stockholder is a
holder of record of stock of the corporation entitled to vote
at such meeting and, if applicable, intends to appear in
person or by proxy at the meeting to nominate the person or
persons specified in the notice;
(iii) if applicable, a description of all
arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder;
(iv) such other information regarding each nominee
or each matter of business to be proposed by such stockholder
as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated, or intended to be
nominated, or the matter been proposed, or intended to be
proposed by the Board of Directors; and
(v) if applicable, the consent of each nominee to
serve as director of the corporation if so elected.
The Chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice
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shall be deemed to have been given at the time when delivered personally or
deposited in the mail or sent by telegram or other means of written
communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting in
accordance with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the laws of the State of
Delaware or of the certificate of incorporation or these bylaws, a different
vote is required, in which case such express provision shall govern and control
the decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business that might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these
bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners, and to voting trusts and other voting agreements).
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Except as may be otherwise provided in the articles of incorporation
or these bylaws, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder and stockholders shall not be
entitled to cumulate their votes in the election of directors of with respect
to any matter submitted to a vote of the stockholders.
Notwithstanding the foregoing, if the stockholders of the corporation
are entitled, pursuant to Sections 2115 and 301.5 of the California
Corporations Code, to cumulate their votes in the election of directors, each
such stockholder shall be entitled to cumulate votes (i.e., cast for any
candidate a number of votes greater than the number of votes that such
stockholder normally is entitled to cast) only if the candidates' names have
been properly placed in nomination (in accordance with these bylaws) prior to
commencement of the voting, and the stockholder requesting cumulative voting
has given notice prior to commencement of the voting of the stockholder's
intention to cumulate votes. If cumulative voting is properly requested, each
holder of stock, or of any class or classes or of a series or series thereof,
who elects to cumulate votes shall be entitled to as many votes as equals the
number of votes that (absent this provision as to cumulative voting) he or she
would be entitled to cast for the election of directors with respect to his or
her shares of stock multiplied by the number of directors to be elected by him,
and he or she may cast all of such votes for a single director or may
distribute them among the number to be voted for, or for any two or more of
them, as he or she may see fit.
2.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the certificate of incorporation or
these bylaws.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a
record date, which shall not precede the date upon which the resolution fixing
the record date is adopted by the board of directors and which shall not be
more than sixty (60) days nor less than ten (10) days before the date of any
such meeting, and in such event only stockholders of record on the date so
fixed are entitled to notice and to vote, notwithstanding any transfer of any
shares on the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
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A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned
meeting, but the board of directors shall fix a new record date if the meeting
is adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission,
telefacsimile or otherwise) by the stockholder or the stockholder's
attorney-in-fact. The revocability of a proxy that states on its face that it
is irrevocable shall be governed by the provisions of Section 212(e) of the
General Corporation Law of Delaware.
2.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, or, in the absence of the president and the chairman of the board, one
of the corporation's vice presidents, shall call the meeting of the
stockholders to order, and shall act as chairman of the meeting. In the
absence of the president, the chairman of the board, and all of the vice
presidents, the stockholders shall appoint a chairman for such meeting. The
chairman of any meeting of stockholders shall determine the order of business
and the procedures at the meeting, including such matters as the regulation of
the manner of voting and the conduct of business. The secretary of the
corporation shall act as secretary of all meetings of the stockholders, but in
the absence of the secretary at any meeting of the stockholders, the chairman
of the meeting may appoint any person to act as secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
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ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the certificate of incorporation and these bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
3.2 NUMBER OF DIRECTORS
The board of directors shall be not less than five (5) nor more than
seven (7) members. The exact number of directors shall be five (5) until
changed, within the limits specified above by a bylaw amending this Section 3.2
duly adopted by the board of directors or by the stockholders. The indefinite
number of directors may be changed, or a definite number may be fixed without
provision for an indefinite number, by an amendment to this bylaw, duly adopted
by the board of directors or by the stockholders, or by a duly adopted
amendment to the certificate of incorporation.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Each director, including a director elected or appointed to
fill a vacancy, shall hold office until the expiration of the term for which
elected and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote
of the stockholders or by court order may be filled only by the affirmative
vote of a majority of the shares represented and voting at a duly held meeting
at which a quorum is present (which shares voting affirmatively also constitute
a majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has
been elected and qualified.
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Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting
from any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of the certificate of incorporation or these
bylaws, or may apply to the Court of Chancery for a decree summarily ordering
an election as provided in Section 211 of the General Corporation Law of
Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as
aforesaid, which election shall be governed by the provisions of Section 211 of
the General Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting, regular or special, may be held by conference telephone
or similar communication equipment, so long as all directors participating in
the meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
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3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
if the times of such meetings are fixed by the board of directors. If any
regular meeting day shall fall on a legal holiday, then the meeting shall be
held next succeeding full business day.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the corporation. If the notice is
mailed, it shall be deposited in the United States mail at least four (4) days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before
the time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose or the place of the meeting, if the meeting is to be held at the
principal executive office of the corporation.
3.8 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in
Section 3.10 of these bylaws. Every act or decision done or made by a majority
of the directors present at a duly held meeting at which a quorum is present
shall be regarded as the act of the board of directors, subject to the
provisions of the certificate of incorporation and other applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
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3.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than twenty- four (24) hours.
If the meeting is adjourned for more than twenty-four (24) hours, then notice
of the time and place of the adjourned meeting shall be given before the
adjourned meeting takes place, in the manner specified in Section 3.7 of these
bylaws, to the directors who were not present at the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall
not be construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, employee or otherwise and receiving
compensation for those services.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares
of stock of the corporation. Nothing contained in this section shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
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ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board.
The board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the
vote of a majority of the authorized number of directors. Any committee, to
the extent provided in the resolution of the board, shall have and may exercise
all the powers and authority of the board, but no such committee shall have the
power of authority to:
(a) amend the certificate of incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) of the General Corporation Law of Delaware, fix
the designations and any of the preferences or rights of such shares relating
to dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other
class or classes of stock of the corporation);
(b) adopt an agreement of merger or consolidation under
Sections 251 or 252 of the General Corporation Law of Delaware;
(c) recommend to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets;
(d) recommend to the stockholders a dissolution of the
corporation or a revocation of a dissolution; or
(e) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of Delaware.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws,
Section 3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7
(special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of
notice), Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and
Section 3.12 (action
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without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
4.3 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of
an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the
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board or, except in case of an officer chosen by the board of directors, by any
officer upon whom such power of removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and
shall, subject to the control of the board of directors, have general
supervision, direction, and control of the business and the officers of the
corporation. He shall preside at all meetings of the stockholders and, in the
absence or nonexistence of a chairman of the board, at all meetings of the
board of directors. He shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform
all the duties of the president and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the president. The vice
presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the board of directors,
these bylaws, the president or the chairman of the board.
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5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if
special, how authorized and the notice given), the names of those present at
directors' meetings or committee meetings, the number of shares present or
represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares held
by each, the number and date of certificates evidencing such shares, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law
or by these bylaws. He shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware as the same now exists or
may hereafter be amended, indemnify any person
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against expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement actually and reasonably incurred in connection with any
threatened, pending or completed action, suit, or proceeding in which such
person was or is a party or is threatened to be made a party by reason of the
fact that such person is or was a director or officer of the corporation. For
purposes of this Section 6.1, a "director" or "officer" of the corporation
shall mean any person (i) who is or was a director or officer of the
corporation, (ii) who is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, or (iii) who was a director or officer of a corporation
which was a predecessor corporation of the corporation or of another enterprise
at the request of such predecessor corporation.
The corporation shall be required to indemnify a director or officer
in connection with an action, suit, or proceeding (or part thereof) initiated
by such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to
indemnification hereunder in defending any action, suit or proceeding referred
to in this Section 6.1 in advance of its final disposition; provided, however,
that payment of expenses incurred by a director or officer of the corporation
in advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by the director or officer to repay
all amounts advanced if it should ultimately be determined that the director of
officer is not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding, in which such person was or is a party or is threatened to be
made a party by reason of the fact that such person is or was an employee or
agent of the corporation. For purposes of this Section 6.2, an "employee" or
"agent" of the corporation (other than a director or officer) shall mean any
person (i) who is or was an employee or agent of the corporation, (ii) who is
or was serving at the request of the corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
(iii) who was an employee or agent
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of a corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as
such, whether or not the corporation would have the power to indemnify him or
her against such liability under the provisions of the General Corporation Law
of Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean
a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent is the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing that authorizes the attorney or other agent to
so act on behalf of the stockholder. The demand under oath shall be directed to
the corporation at its registered office in Delaware or at its principal place
of business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine (and to make copies of)
the corporation's stock ledger, a list of its stockholders and its other books
and records for a purpose reasonably related to his or her position as a
director.
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7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
7.5 CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these bylaws, as amended or otherwise
altered to date, certified by the secretary, shall be kept at the corporation's
principal executive office and shall be open to inspection by the stockholders
of the corporation, at all reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any other lawful
action (other than action by stockholders by written consent without a
meeting), the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days before any such action. In that case,
only stockholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except
as otherwise provided in the General Corporation Law of Delaware.
If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable
resolution.
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8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness
that are issued in the name of or payable to the corporation, and only the
persons so authorized shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered to
the corporation. Notwithstanding the adoption of such a resolution by the
board of directors, every holder of stock represented by certificates and, upon
request, every holder of uncertificated shares, shall be entitled to have a
certificate signed by, or in the name of the corporation by, the chairman or
vice-chairman of the board of directors, or the president or vice-president,
and by the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation with the same
effect as if he or she were such officer, transfer agent or registrar at the
date of issue.
Certificates for shares shall be of such form and device as the board
of directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such
facts.
Upon surrender to the secretary or transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall
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be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, or upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the
designations, the preferences and the relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company -- either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
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<PAGE> 84
8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules
of construction, and definitions in the General Corporation Law of Delaware
shall govern the construction of these bylaws. Without limiting the generality
of this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted,
amended or repealed by the stockholders entitled to vote or by the board of
directors of the corporation. The fact that such power has been so conferred
upon the directors shall not divest the stockholders of the power, nor limit
their power to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or the filing of the operative written consent(s) shall be
stated in said book.
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<PAGE> 85
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MERIDIAN DATA, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1997
The undersigned shareholder of MERIDIAN DATA, INC., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated April 2, 1997, and the 1997 Annual
Report to Shareholders and hereby appoints Charlie Bass and Gianluca U.
Rattazzi, and each of them, proxies and attorneys-in-fact, with full power to
each of substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the 1997 Annual Meeting of Shareholders of MERIDIAN DATA,
INC. to be held on April 23, 1997 at 9:30 a.m., local time, at The Inn at
Pasatiempo located at 555 Highway 17, Santa Cruz, California 95060, and at any
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE ADOPTION OF THE 1997
INCENTIVE STOCK PLAN, FOR THE AMENDMENT TO THE 1992 EMPLOYEE STOCK PURCHASE PLAN
TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE, FOR THE REINCORPORATION
OF THE COMPANY FROM CALIFORNIA TO DELAWARE, FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD
(except as indicated.)
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST
BELOW:
Charlie Bass; Peter R. Johnson; Gianluca U. Rattazzi; Mario M.
Rosati; Pierluigi Zappacosta
<PAGE> 86
2. PROPOSAL TO ADOPT THE 1997 INCENTIVE STOCK PLAN AND THE
RESERVATION OF 900,000 SHARES FOR ISSUANCE THEREUNDER:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE AMENDMENT TO THE 1992 EMPLOYEE STOCK
PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER BY 100,000 SHARES TO 300,000 SHARES:
/ / / / / /
4. PROPOSAL TO APPROVE THE REINCORPORATION OF THE COMPANY FROM
CALIFORNIA TO DELAWARE:
/ / / / / /
5. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS
THE INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR FISCAL 1997:
/ / FOR / / AGAINST / / ABSTAIN
6. TO TRANSACT SUCH OTHER BUSINESS, IN THEIR DISCRETION, AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
Either of such attorneys or substitutes shall have and may exercise all of the
powers of said attorneys-in-fact hereunder.
Dated: , 1997
--------------------
---------------------------------
Signature
---------------------------------
Signature
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his, her or its name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
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<PAGE> 87
MERIDIAN DATA, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED EFFECTIVE APRIL 23, 1997)
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Meridian Data, Inc.
(e) "Compensation" shall mean base straight time gross
earnings, commissions, overtime and shift premium, exclusive of payments for
incentive compensation, incentive payments, bonuses, and other compensation;
provided that, for individuals who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended, Compensation shall not include commissions."
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an employee of
the Company for purposes of tax withholding under the Code whose customary
employment with the Company or any Designated Subsidiary is at least twenty (20)
hours per week and more than five (5) months in any calendar year. For purposes
of the Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship will be deemed to have terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last day of each Offering
Period.
<PAGE> 88
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sale price for the Common Stock (or
the mean of the closing bid and asked prices, if no sales were reported), as
quoted on such exchange (or the exchange with the greatest volume of trading in
Common Stock) or system on the date of such determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(k) "Offering Period" shall mean a period of approximately six
(6) months, commencing on the first Trading Day on or after May 1 and
terminating on the last Trading Day in the period ending the following October
30, or commencing on the first Trading Day on or after November 1 and
terminating on the last Trading Day in the period ending the following April 30.
The duration, commencement and termination of Offering Periods may be changed
pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(o) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(p) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
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<PAGE> 89
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after May 1 and November 1 each year, or on such other date as the
Board shall determine, and continuing thereafter until terminated in accordance
with Section 19 hereof. The Board shall have the power to change the duration of
Offering Periods (including the commencement and/or termination dates thereof)
with respect to future offerings without shareholder approval if such change is
announced at least five (5) days prior to the schedule beginning of the first
Offering Period to be effected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's Human Resources
Department prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period, and the aggregate of such payroll deductions during the Offering Period
shall not exceed ten percent (10%) of the participant's Compensation during said
Offering Period.
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<PAGE> 90
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during an Offering Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Offering Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than a
number of Shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and
shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the
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<PAGE> 91
Exercise Date, and the maximum number of full shares subject to option shall be
purchased for such participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No fractional shares will
be purchased; any payroll deductions accumulated in a participant's account
which are not sufficient to purchase a full share shall be retained in the
participant's account for the subsequent Offering Period, subject to earlier
withdrawal by the participant as provided in Section 10 hereof. Any other monies
left over in a participant's account after the Exercise Date shall be returned
to the participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account will be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made during the Offering Period.
If a participant withdraws from an Offering Period, payroll deductions will not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee, for any
reason, including by virtue of him or her having failed to remain an Employee of
the Company for at least twenty (20) hours per week during an Offering Period in
which the Employee is a participant, he or she will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such participant's
account during the Offering Period but not yet used to exercise the option will
be returned to such participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 14 hereof, and such
participant's option will be automatically terminated.
(c) A participant's withdrawal from an Offering Period will
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 300,000 shares,
subject to adjustment upon changes
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<PAGE> 92
in capitalization of the Company as provided in Section 18 hereof. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant will have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the
Board or a committee of members of the Board appointed by the Board. The Board
or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment,
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<PAGE> 93
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds from an Offering
Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the Reserves as well as the price per share
of Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration". Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"). The
New Exercise Date shall be before the date of the Company's proposed sale or
merger. The Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
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<PAGE> 94
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law or regulation), the Company shall obtain shareholder
approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
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<PAGE> 95
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
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EXHIBIT A
MERIDIAN DATA, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate in
the Meridian Data, Inc. 1992 Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") and subscribes to purchase shares of
the Company' s Common Stock in accordance with this Subscription
Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete "Employee Stock Purchase Plan."
I understand that my participation in the Employee Stock Purchase Plan
is in all respects subject to the terms of the Plan. I understand that
the grant of the option by the Company under this Subscription
Agreement is subject to obtaining shareholder approval of the Employee
Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse Only):
________________________________
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of
any disposition of shares and I will make adequate provision for
Federal, state or other tax withholding obligations, if any, which
arise upon the disposition of the Common Stock. The
<PAGE> 97
Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year holding period, I understand
that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such
income will be taxed as ordinary income only to the extent of an amount
equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I
paid for the shares, or (2) 15% of the fair market value of the shares
on the first day of the Offering Period. The remainder of the gain, if
any, recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) ___________________________________________________________
(First) (Middle) (Last)
______________________________ ________________________________________
Relationship
________________________________________
(Address)
-2-
<PAGE> 98
Employee's Social
Security Number: ________________________________________
Employee's Address: ________________________________________
________________________________________
________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ___________________ ________________________________________
Signature of Employee
________________________________________
Print Name
________________________________________
Spouse's Signature (If beneficiary other
than spouse)
________________________________________
Print Name
-3-
<PAGE> 99
EXHIBIT B
MERIDIAN DATA, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Meridian
Data, Inc. 1992 Employee Stock Purchase Plan which began on _____________ 19____
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
________________________________________
________________________________________
________________________________________
Signature:
________________________________________
Date:___________________________________
