<PAGE>
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MERIDIAN DATA, INC.
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[COMPANY LOGO]
Dear Stockholder,
Enclosed are Meridian Data's Annual Report on Form 10-K, Notice of
Annual Meeting of Stockholders, 1998 Proxy Statement, and Proxy Card. There are
several issues related to the operation of Meridian that require your immediate
attention. Your vote counts and we strongly encourage you to exercise your right
to vote your shares.
We have asked you to approve the reservation of an additional 400,000
shares for issuance under the 1997 Stock Option Plan (the "Plan"). We would like
a few moments of your time to explain why we need approval for these additional
shares.
In February of this year, we previewed Meridian's new Snap! Server. We
believe that this new product provides an entry into an exciting, new market for
your company. We are planning an ambitious product rollout for the Snap! Server,
are already working on the next generation of the Snap! Server, and have begun
staffing these efforts. The ability for any company to grow and prosper is
directly dependent on its ability to retain and attract highly qualified
personnel. In today's high tech employment market, a key component of every
employee's compensation takes the form of stock options. These options only
become valuable if the company prospers and the value of its shares increases.
This has the effect of directly aligning the interests of key personnel with
those of the company's Stockholders.
Meridian's future success is linked to its ability to continue
developing new and innovative products and accelerating their acceptance in the
marketplace. To accomplish this task, we will need to retain and motivate our
current employee base and attract highly qualified new employees. Unless the
additional shares for the Plan are approved, we will be at a large competitive
disadvantage in retaining and recruiting the personnel necessary to achieve our
current and long term goals.
We strongly encourage you to vote in favor of the additional shares for
the 1997 Plan, so that we may continue to retain and attract the best personnel
necessary to achieve our current and long term goals.
Please mark the boxes on the Proxy Card to indicate how your shares
will be voted. Then sign the Proxy Card, detach it and return it in the enclosed
postage paid envelope. Thank you in advance for your prompt consideration of
these matters.
Sincerely,
/s/ GIANLUCA U. RATTAZZI
Gianluca U. Rattazzi,
President and CEO
<PAGE>
MERIDIAN DATA, INC.
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1998
-----------------------------------------
TO THE STOCKHOLDERS:
Notice is hereby given that the 1998 Annual Meeting of Stockholders of
Meridian Data, Inc., a corporation organized under the laws of the State of
Delaware, (the "Company") will be held on Wednesday, April 22, 1998 at 9:30
a.m., local time, at The Inn at Pasatiempo, located at 555 Highway 17, Santa
Cruz, California 95060 for the following purposes:
1. To elect five directors of the Company.
2. To amend the 1997 Incentive Stock Plan to increase the number
of shares reserved for issuance thereunder by 400,000 to
1,300,000.
3. To amend the 1992 Employee Stock Purchase Plan to increase the
number of shares reserved for issuance thereunder by 100,000
to 400,000.
4. To confirm the appointment of Price Waterhouse LLP as the
Company's independent accountants for the 1998 fiscal year.
5. 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 stockholders of record at the close of business on March 6, 1998
are entitled to vote at the Annual Meeting.
All stockholders 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 stockholder attending the meeting may
vote in person even if the stockholder has returned a proxy.
By Order of The Board of Directors
Mario M. Rosati
Secretary
Scotts Valley, California
March 25, 1998
- - --------------------------------------------------------------------------------
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.
- - --------------------------------------------------------------------------------
<PAGE>
MERIDIAN DATA, INC.
-------------------
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
-----------------------------------
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 Stockholders to be held on April 22, 1998 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 Stockholders. 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 25, 1998 to all
stockholders 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 6, 1998 are entitled to notice of the meeting and to vote at the meeting.
At the record date, 8,802,788 shares of the Company's Common Stock were issued
and outstanding and held by 98 stockholders of record and approximately 4,000
beneficial owners.
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock of the Company as of March 1, 1998 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:
Five Percent Stockholders, Directors and Shares Beneficially Owned (1)
Executive Officers Number Percent
- - -------------------------------------------------- ------- -------
Pioneering Management Corporation................. 916,000 10.41%
60 State Street
Boston, MA 02114
Dimensional Fund Advisors (2)..................... 582,800 6.62%
1299 Ocean Avenue
Santa Monica, CA 90401
Charlie Bass (3).................................. 196,121 2.19%
Gianluca U. Rattazzi (4).......................... 167,502 1.87%
Erik E. Miller (5)................................ 109,453 1.00%
Shmuel Shottan (6)................................ 104,708 1.18%
Charles Joseph, Jr. (7)........................... 7,500 *
Pierluigi Zappacosta (8).......................... 27,000 *
Peter R. Johnson (9).............................. 19,375 *
Mario M. Rosati (10).............................. 19,375 *
All executive officers and directors
as group (8 persons) (11)...................... 651,034 6.93%
- - -------------------------------------------------- ------- -------
* Less than 1%.
(1) Applicable percentage ownership based on 8,802,788 shares of Common Stock
outstanding as of March 1, 1998. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission.
Shares of Common Stock subject to options currently exercisable or
exercisable within 60 days after March 1,1998 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) Persons who are officers of Dimensional Fund Advisors also serve as
officers of DFA Investment Dimensions Group Inc., (the "Fund") and The DFA
Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940. In
their capacities as officers of the Fund and the Trust, these persons vote
71,600 shares which are owned by the Fund and 150,000 shares which are
owned by the Trust. All securities reported on the schedule are owned by
advisory clients of Dimensional Fund Advisors Inc. Dimensional Fund
Advisors Inc. disclaims beneficial ownership of all such securities.
(3) 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 March 1, 1998 and 76,666 shares subject to options held by Bass
Associates, which are exercisable within 60 days after March 1, 1998. Dr.
Bass disclaims beneficial ownership of the shares and options held by Bass
Associates, except to the extent of his proportionate interest therein.
(4) Consists of 167,502 shares subject to options exercisable within 60 days
after March 1, 1998.
(5) Includes 89,617 shares subject to options exercisable within 60 days after
March 1, 1998.
(6) Consists of 104,708 shares subject to options exercisable within 60 days
after March 1, 1998.
(7) Consists of 7,500 shares subject to options exercisable within 60 days
after March 1, 1998.
(8) Consists of 27,000 shares subject to options exercisable within 60 days
after March 1, 1998.
(9) Consists of 19,375 shares subject to options exercisable within 60 days
after March 1, 1998.
(10) Consists of 19,375 shares subject to options exercisable within 60 days
after March 1, 1998.
(11) Includes 585,033 shares subject to options exercisable within 60 days
after March 1, 1998.
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. Stockholders will not be entitled to cumulate their votes in the
election of directors.
The cost of soliciting proxies will be borne by the Company. The
Company may retain the services of its transfer agent, Boston EquiServe, or
other proxy solicitors 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.
Quorum; Required Vote
A majority of the shares entitled to vote at the Annual Meeting,
present in person or represented by proxy, shall constitute a quorum at the
Annual Meeting. A plurality of the Votes Cast at the Annual Meeting is required
for the election of directors. In the other proposals, the affirmative vote of
the majority of the Votes Cast is required for approval. "Votes Cast" means the
shares present in person or represented by proxy at the Annual Meeting.
Under the General Corporation Law of the State of Delaware, an
abstaining vote and a broker "non-vote" are entitled to vote and are, therefore,
included for purposes of determining whether a quorum of shares is present at a
meeting.
Abstentions are treated as shares that are Votes Cast, but not as an
affirmative vote on any matter submitted to the stockholders for a vote. Thus,
abstentions are included in the tabulation of the voting results on the election
of directors and proposals requiring an affirmative vote of a majority of the
Votes Cast and, therefore, have the effect of votes in opposition.
Broker non-votes, however, are not treated as shares that are present.
Thus, broker non-votes are not included in the tabulation of the voting results
on the election of directors or issues requiring a majority of the Votes Cast
and, therefore, do not have the effect of votes in opposition in such
tabulations. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
Any proxy which is returned using the form of proxy enclosed and which
is not marked as to a particular item will be voted for the election of
directors, for the amendment to the 1997 Incentive Stock Plan, for the amendment
to the 1992 Employee Stock Purchase Plan, for the confirmation of the
appointment of the designated independent public accountants and, as the proxy
holders deem advisable, on other matters that may come before the meeting, as
the case may be with respect to the items not marked.
Deadline for Receipt of Stockholder Proposals
Stockholders may present proper proposals for inclusion in the
Company's proxy statement and for consideration at the next annual meeting of
its stockholders by submitting their proposals in writing to the Secretary of
the Company in a timely manner. In order to be included in the Company's proxy
materials for the 1999 annual meeting of stockholders, stockholder proposals
must be received by the Secretary of the Company no later than December 31,
1998, and must otherwise comply with the requirements of Rule 14a-8 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
<PAGE>
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 five 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 stockholders nominate persons
other than the Company's nominees for election as directors, the proxy holders
will vote all proxies received by them so as to assure the election of as many
of the Board's nominees as possible. The term of office of each person elected
as a director will continue until the next annual meeting of stockholders or
until that person's successor has been elected.
The Board of Directors recommends the following nominees:
Director
Name of Nominee Age Principal Occupation Since
- - -------------------- --- ------------------------------ --------
Charlie Bass 55 Chairman of the Board of Directors
of Meridian Data, Inc. 1988
Peter R. Johnson 50 Chairman of the Board of Directors
of QuickResponse Services, Inc. 1995
Gianluca U. Rattazzi 44 President and Chief Executive
Officer of Meridian Data, Inc. 1988
Mario M. Rosati 51 Member of Wilson Sonsini Goodrich
& Rosati 1995
Pierluigi Zappacosta 46 Vice-Chairman of Logitech, Inc. 1992
Dr. Bass co-founded the Company in July 1988 and has been the Chairman
of the Board of Directors since July 1991. Dr. Bass was also Chairman of the
Board of Directors from the Company's inception to August 1990. 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 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. Mr. Johnson is an investor in and a consultant to a number of
technology companies.
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 Software, Inc., a software applications company, Genus, Inc.,
a manufacturer of semiconductor equipment, Ross Systems, Inc., a software
applications company and Sanmina Corporation, an electronics contract
manufacturer.
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 Vice-Chairman. 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.
Required Vote; Recommendation of the Board of Directors
The five nominees receiving the highest number of the Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF NOMINEES.
Board Meetings and Committees
The Board of Directors of the Company held four meetings during the
1997 fiscal year and acted twice 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.
The Board of Directors has a Compensation Committee and an Audit
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 1997. 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. The Compensation
Committee did not meet during the 1997 fiscal year and acted once by unanimous
written consent.
The Audit Committee consisted of directors Bass and Rosati in fiscal
1997. 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 1997 fiscal year and did not act by
unanimous written consent. 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 1996 audit.
The Company has adopted provisions in its Certificate 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 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 Delaware law,
including circumstances in which indemnification is otherwise discretionary
under Delaware 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 Delaware
General Corporation Law. 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 ("Outside 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. Employee Directors
are eligible to receive stock option grants under either the Company's 1988
Incentive Stock Plan or the 1997 Incentive Stock Plan.
Outside Directors are eligible to receive stock option grants under the
1995 Director Option Plan (the "Director Plan"). The Director Plan provides that
each new Outside Director that joins the Board will automatically be granted an
option at fair market value to purchase 12,500 shares of Common Stock upon the
date on which such person first becomes an Outside Director. These options vest
at a rate of 25% per year following the date of grant so long as the optionee
remains a director of the Company. The Director Plan also provides for the grant
of options to Outside Directors pursuant to a nondiscretionary, automatic grant
mechanism, whereby each Outside Director is granted an option at fair market
value to purchase 5,000 shares on the date of each Annual Meeting of
Stockholders, provided such director is reelected. These shares vest ratably
over the eight months following the month of grant.
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, 1997
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
- - ------------------------ ---------------------- ------------------------------
Annual Compensation Long-Term Compensation
------------------- ----------------------
Securities
Fiscal Underlying
Name and Principal Position Year Salary Bonus Options/SARs
- - ----------------------------------- ---- -------- -------- ----------
Gianluca U. Rattazzi............... 1997 $240,000 $ 84,700 250,000
President and CEO 1996 220,000 175,600 0
1995 200,000 106,000 115,000
Erik E. Miller..................... 1997 $135,000 $ 45,900 80,000
Sr. Vice President, Finance and 1996 120,000 70,200 0
Chief Financial Officer 1995 100,000 45,000 55,000
Shmuel Shottan..................... 1997 $160,000 $ 47,800 100,000
Sr. Vice President, Engineering 1996 140,000 65,500 0
Chief Technical Officer 1995 122,659 43,100 50,000
Charles Joseph, Jr................. 1997 $165,000 $ 62,423 140,000(1)
Executive Vice President, Sales 1996 25,385 5,384 110,000
and Marketing
(1) Includes an option for 110,000 shares that was canceled and re-granted in
connection with the Company's stock option exchange in April 1997. See
"Report of the Compensation Committee--Stock Option Exchange."
Stock Option Information
Option/SAR Grants in Last Fiscal Year. The following table sets forth
certain information for the year ended December 31, 1997, with respect to each
grant of stock options to the individuals named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
Option Grants in 1997
Individual Grants
--------------------------------------------------------
% of Total Potential
Options Realizable Value
Granted to at Assumed Annual
Number of Employees Rates of Stock
Underlying in Exercise Price Appreciation
Options Fiscal Price Per Expiration for Option Term(4)
Name Granted(1) Year(2) Share(3) Date 5% 10%
- - -------------------------- ------- ---- ----- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gianluca U. Rattazzi...... 250,000 20.7% $3.375 4/24/07 $530,630 $1,340,720
Erik E. Miller............ 80,000 6.6% 3.375 4/24/07 169,802 430,310
Shmuel Shottan............ 100,000 8.3% 3.375 4/24/07 212,252 537,888
Charles Joseph, Jr........ 140,000(5) 11.6% 3.375 4/24/07 297,153 753,043
<FN>
(1) The stock options granted to Dr. Rattazzi, Mr. Miller and Mr. Shottan
become exercisable at the rate of 1/48 per month commencing on May 1,
1997. The stock options granted to Mr. Joseph become exercisable at the
rate of 1/48 per month commencing on December 1, 1997.
(2) Based on an aggregate of 1,205,584 options granted in 1997, including
options granted to the individuals named in the Summary Compensation Table
above.
(3) Options are granted at an exercise price equal to the closing market per
share price on the date of grant.
(4) In accordance with the rules of the SEC, shown are the gains or "option
spreads" that would exist for the respective options granted. These gains
are based on the assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the option was granted over the full option
term. These assumed annual compound rates of stock price appreciation are
mandated by the rules of the SEC and do not represent the Company's
estimate or projection of future Common Stock prices.
(5) Includes an option for 110,000 shares that was canceled and re-granted in
connection with the Company's stock option exchange in April 1997. See
"Report of the Compensation Committee--Stock Option Exchange."
</FN>
</TABLE>
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, 1997 and the fiscal year end number and value of exercisable and
unexercisable options:
<TABLE>
<CAPTION>
Aggregate Option/SAR Exercises in 1997
and 1997 Year-End Values
Shares Number of Unexercised Value of Inexercised In-the-
Acquired on Value Options at 12/31/97 Money Options at 12/31/97 (1)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gianluca U. Rattazzi.............. -- $ -- 126,670 268,333 $23,459 $117,291
Erik E. Miller.................... -- -- 76,283 86,667 7,506 37,534
Shmuel Shottan.................... -- -- 16,667 83,333 9,384 46,916
Charles Joseph, Jr................ -- -- 5,000 135,000 2,815 76,005
<FN>
(1) Based upon a fair market value of $3.938 per share as of December 31, 1997
less the exercise price per share.
</FN>
</TABLE>
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 six months' salary in the
event of termination of employment without cause.
REPORT OF THE COMPENSATION COMMITTEE
The following report is provided to stockholders 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 stockholder and
executive interests:
In order to align the long-term interests of executives with
those of stockholders, 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.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the tax deductibility by a company of compensation in excess of
$1,000,000 paid to any of its five most highly compensated executive officers.
However, performance-based compensation that has been approved by stockholders
is excluded from the $1,000,000 limit if, among other requirements, the
compensation is payable only upon attainment of pre-established, objective
performance goals and the board committee that establishes such goals consists
only of outside directors as defined in the Code for purposes of Section 162(m).
All of the members of the Company's Compensation Committee qualify as outside
directors.
While the tax impact of any compensation arrangement is one factor to
be considered, the Compensation Committee evaluates such impact in light of its
overall compensation philosophy. The Compensation Committee intends to establish
executive officer compensation programs which will maximize the Company's
deduction if the Committee determines that such actions are consistent with its
philosophy and in the best interests of the Company and its stockholders.
However, from time to time the Committee may award compensation which is not
fully deductible if the Committee determines that such award is consistent with
its philosophy and in the best interests of the Company and its stockholders.
Stock Option Exchange
On April 24, 1997, the Board of Directors offered all employees the
opportunity to exchange their outstanding stock options for new options that
would be exercisable at the fair market value of the Company's Common Stock as
of the closing of the stock market on April 24, 1997 ($3.375). These new options
would otherwise be identical to the old options except that the new options
would be subject to a new vesting schedule. The stock option exchange was an
acknowledgment of the importance to the Company of its employees and of the
incentive to employees represented by stock options, especially in considering
alternative opportunities. The Board considered such factors as the competitive
environment for obtaining and retaining qualified employees and the overall
benefit to the stockholders from a highly motivated group of employees.
The following table sets forth, as to all executive officers of the
Company, certain information concerning the repricing of all such officers
options since the Company's inception.
<TABLE>
<CAPTION>
Ten-Year Option Repricing Table
Number of
Securities Market Price Length of
Underlying of stock at Exercise Price Original Option
Options time of at time of New Exercise Term Remaining at
Name Date Repriced Repricing Repricing Price Date of Repricing
- - -------------------------- ------- ---------- ------------ -------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Shmuel Shottan............ 04/21/94 50,000 $6.500 $22.500 $6.500 9 yrs., 175 days
Charles Joseph............ 04/24/97 110,000 $3.375 $ 7.375 $3.375 9 yrs., 194 days
</TABLE>
Compensation of Gianluca U. Rattazzi, President and Chief Executive Officer
During 1997, 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 1997 is set forth in the Summary Compensation Table appearing
on page 6. Based on the Company's quarterly performance during 1997, Dr.
Rattazzi was paid quarterly bonuses based on the degree to which he attained
both individual and corporate goals.
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
stockholder 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.
PERFORMANCE GRAPH
Set forth below are line graphs comparing the cumulative total return
to stockholders of the Company's Common Stock at December 31, 1997 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 Tricord Systems, Inc., Auspex, Inc., Compaq
Computer Corporation and Dell Computer Corporation, the Company's principal
competitors in the network server market (1).
3/30/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 % RETURN
--------------------------------------------------------------------
MDCD 100.00 100.00 33.33 90.63 56.78 32.81 -43,23%
Peers 100.00 63.39 77.23 92.61 131.36 235.78 31.36
Nasdaq 100.00 112.67 110.15 155.75 191.58 236.53 91.58
(1) NetFRAME Systems, Inc. and AST Research, Inc. have been omitted from the
Company's group of peer issuers. NetFRAME Systems, Inc. was acquired by
Micron Electronics, Inc. in August 1997 and AST Research, Inc. was acquired
by Samsung Electronics in August 1997.
(2) The returns of each of the companies included in the group of peer issuers
selected by the Company have been weighted according to their respective
stock market capitalization.
CERTAIN TRANSACTIONS
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.
On June 30, 1997, DSC fully repaid the Loan, including interest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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 stockholders 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, 1997 to December 31, 1997, its executive
officers, directors and ten percent stockholders filed all required Section
16(a) reports on a timely basis.
<PAGE>
PROPOSAL NO. 2:
AMENDMENT OF THE 1997 INCENTIVE STOCK PLAN TO INCREASE THE NUMBER
OF SHARES RESERVED FOR ISSUANCE THEREUNDER BY 400,000 TO 1,300,000
Proposal
The Board of Directors of the Company amended the Company's 1997
Incentive Stock Plan (the "Stock Plan") on February 10, 1997, subject to
stockholder approval, to increase the number of shares reserved for issuance
under the Stock Plan by an aggregate of 400,000 shares to a new total of
1,300,000 shares.
Summary of Plan
Purpose. The purposes of the Stock Plan are to attract and retain the
best available personnel, to provide additional incentive to employees and
directors of the Company and to promote the success of the Company's business.
Status of Shares. Of the 900,000 shares authorized prior to the
amendment described above, 746,300 shares had been granted as of December 31,
1998, and 155,700 shares remained available for future grant as of such date.
Administration. The Stock Plan is administered by the Board of
Directors of the Company or by a committee appointed by the Board of Directors
and consisting of at least two members of the Board. The Board or its committee
has sole discretion to interpret any provision of the Stock Plan. This
determination is final and conclusive. Members of the Board are elected by the
stockholders for terms of approximately one year and can be removed from office
upon a sufficient vote of stockholders. Members of the Board or its committee
receive no additional compensation for administering the Stock Plan. The
President and Chief Executive Officer of the Company is a member of the Board.
Eligibility. The Stock Plan provides that options and stock purchase
rights may be granted to employees and consultants of the Company and its
majority-owned subsidiaries. Only employees may be granted "incentive stock
options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Employees or consultants may be granted "stock purchase
rights." The Board or its committee selects the optionees and determines the
number of shares to be subject to each option.
Exercise Price. The exercise price of options granted under the Stock
Plan is determined by the Board or its committee. The exercise price of
incentive stock options may not be less than 100% of the fair market value of
the Common Stock on the date the option is granted. However, the exercise price
of options granted to an optionee who owns more than 10% of the voting power or
value of all classes of stock of the Company must not be less than 110% of the
fair market value on the date of grant. The Common Stock is currently traded on
The Nasdaq Stock Market. While the Company's stock is traded on The Nasdaq Stock
Market, the fair market value is the reported closing price on the date of
grant.
Performance-Based Compensation Limitations. Section 162(m) of the Code
places limits on the deductibility for federal income tax purposes of
compensation paid to certain executive officers of the Company. Accordingly, the
Stock Plan provides that 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
of Section 162(m) of the Code. In the event that the Board or its committee
determines that such limitation is not required to qualify options as
performance-based compensation, the Board or its committee 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 the total number of option shares becoming exercisable at the
end of each 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
from the date of grant; provided that in the case of an incentive stock option
granted to a 10% stockholder, the term of the option may be no more than five
years from the date of grant. 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 Board or its committee 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
Board or its committee.
Unless the Board or its committee 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 its committee may determine.
Adjustments Upon Changes in Capitalization. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Stock Plan, the number and class of shares of stock subject to
any option or stock purchase right outstanding under the Stock Plan, and the
exercise price of any such outstanding option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised options
or stock purchase rights will terminate. The Board or its committee may, in its
discretion provide that each optionee shall have the right to exercise all of
the optionee's options and stock purchase rights, including those not otherwise
exercisable, until the date ten (10) days prior to the consummation of the
liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or
like occurrence involving the Company, each outstanding option or stock purchase
right shall be assumed or an equivalent option or right substituted by the
successor corporation. If the successor corporation refuses to assume the
options and stock purchase rights or to substitute substantially equivalent
options and stock purchase rights, the optionee shall have the right to exercise
the option or stock purchase right as to all the optioned stock, including
shares not otherwise exercisable. In such event, the Board or its committee
shall notify the optionee that the option or stock purchase right is fully
exercisable for fifteen (15) days from the date of such notice and that the
option or stock purchase right terminates upon expiration of such period.
Amendment and Termination. The Board may at any time amend or terminate
the Stock Plan without approval of the stockholders; provided, however, that the
Company will obtain stockholder approval of any amendment to the Stock Plan to
the extent necessary to comply with Rule 16b-3 under the Exchange Act, with
Section 422 of the Code, or with any other applicable law or regulation,
including requirements of the NASD or any established stock exchange. Any
amendment or termination of the Stock Plan is subject to the rights of optionees
under agreements entered into prior to such amendment or termination. The Stock
Plan will terminate by its own terms in 2007.
Certain Federal Tax Information
The Code provides to the optionee favorable federal income tax
treatment of stock options which qualify as "incentive stock options." If an
option granted under the Stock Plan is treated as an incentive stock option, the
optionee will recognize no income upon grant of the option and will recognize no
income upon exercise of the option. The Company will not be allowed a deduction
for federal tax purposes in connection with the grant or exercise of an
incentive stock option.
Upon the sale of the shares at least two years after the grant of the
option and one year after exercise of the option (the "statutory holding
periods"), any gain will be taxed to the optionee as long-term capital gain. If
the statutory holding periods are not satisfied (i.e., the optionee makes a
"disqualifying disposition"), the optionee will recognize compensation 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. Any additional gain or loss recognized on a disqualifying disposition of
the shares will be characterized as capital gain or loss.
Different rules may apply if shares are purchased by an optionee who is
subject to Section 16(b) of the Exchange Act and the optionee subsequently
disposes of such shares prior to the expiration of statutory holding periods.
An incentive stock option must be exercised while the optionee is an
employee of the Company or a subsidiary of the Company, or no more than three
months after the optionee ceases to be an employee. The following additional
conditions must be satisfied for an option to obtain incentive stock option
treatment: (i) the option must be exercisable only within ten years after the
date of grant; (ii) the exercise price must not be less than the fair market
value of the shares at the time the option is granted; (iii) the option must be
granted pursuant to a written plan that sets forth the maximum number of shares
that may be issued under the plan, states the class of employees eligible to
receive options, and is approved by a majority of the stockholders of the
Company within 12 months of the plan's adoption by the Board of Directors; (iv)
the option must be nontransferable other than by death and must be exercisable
during the optionee's lifetime only by him; (v) if the optionee owns more than
10% of the total combined voting power of all classes of the Company's stock
immediately before the option is granted, the exercise price must be at least
110% of the fair market value of the shares and the option must be exercisable
only within five years of the date of grant; and (vi) to the extent that the
aggregate fair market value of stock 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) exceeds $100,000 (determined in accordance
with Section 422(d) of the Code), such options will be treated as nonstatutory
options.
Upon the death of an optionee who has not exercised an incentive stock
option, the value of such option (determined under applicable Treasury
regulations) will be includable in the optionee's estate for federal estate tax
purposes. Upon the exercise of such option, the holder's basis in the option
shares will include the value of the option included in the estate plus the
price paid for the option shares. Different rules apply if the option shares are
sold before the expiration of the one-year and two-year holding periods
described above.
All options other than incentive stock options ("nonstatutory options")
will not qualify for any special tax benefits to the optionee. An optionee will
not recognize any taxable income at the time he is granted a nonstatutory
option. Upon exercise of the option, the optionee will generally recognize
compensation income for federal tax purposes measured by the excess, if any, of
the then fair market value of the shares over the exercise price. However, if
shares subject to a repurchase option of the Company are purchased upon exercise
of a nonstatutory option, no tax will be imposed at the time of exercise with
respect to such non-vested shares (and the optionee's long-term capital gain
holding period will not begin at such time) unless the optionee files an
election with the Internal Revenue Service pursuant to Section 83(b) of the Code
within 30 days after the date of exercise. In the absence of such election, the
optionee is taxed (and the long-term capital gain holding period begins) at the
time at which the shares vest (i.e., the time at which the repurchase option
lapses with respect to such shares), and the optionee recognizes compensation
income in the amount of the difference between the value of the shares at that
time and the option exercise price. If a Section 83(b) election is timely filed,
the non-vested shares will be treated for federal income tax purposes as if they
had been vested at the time of exercise.
Upon the surrender of shares of the Company's Common Stock in connection
with the exercise of a nonstatutory stock option, the optionee will recognize
compensation income as described above. A number of the acquired shares, equal
in number to the surrendered shares, will have a basis equal to the optionee's
basis in the surrendered shares. Any additional shares acquired in the exchange
will have a zero basis, increased by any compensation income recognized with
respect to the exercise of the nonstatutory option. The compensation income
recognized by the optionee who is also an employee will be treated as wages and
will be subject to tax withholding by the Company out of the current
compensation paid to the optionee. If such current compensation is insufficient
to pay the withholding tax, the optionee will be required to make direct payment
to the Company for the tax liability.
Upon a resale of such shares by the optionee, any difference between
the sales price and the fair market value of the shares on the date of exercise
of the nonstatutory option (or the fair market value of the shares on the date
they become vested, if a Section 83(b) election has not been timely filed) will
be treated as capital gain or loss.
The Company will be entitled to a tax deduction in the amount and at
the time that the optionee recognizes ordinary income with respect to shares
acquired upon exercise of a nonstatutory option.
Upon the death of an optionee who has not exercised his or her
nonstatutory option, the value of such option (determined under applicable
Treasury regulations) will be includable in the optionee's estate for federal
estate tax purposes. Upon the exercise of such option, the holder will recognize
compensation income as described above, and will be allowed a deduction based
upon any estate tax paid with respect to the value of such option.
Stock purchase rights receive the same tax treatment as nonstatutory
options.
Required Vote; Recommendation of the Board of Directors
Approval of the amendment to the Stock Plan 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 STOCK PLAN. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT
OF A VOTE AGAINST THE PROPOSAL.
<PAGE>
PROPOSAL NO. 3:
AMENDMENT TO THE 1992 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE
THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE THEREUNDER BY 100,000 TO 400,000
Proposal
The Board of Directors of the Company amended the Company's 1992
Employee Stock Purchase Plan (the "ESPP") on February 10, 1997, subject to
stockholder approval, to increase the number of shares reserved for issuance
under the ESPP by an aggregate of 100,000 shares to a new total of 400,000
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 300,000 shares authorized prior to the
amendment described above, 221,133 shares had been purchased as of December 31,
1997, and 78,867 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 stockholder 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 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 stockholders. No amendment may be made to the ESPP without prior
approval of the stockholders of the Company if such amendment would constitute
an amendment for which stockholder 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 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.
<PAGE>
PROPOSAL NO. 4:
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 1998
fiscal year and recommends that the stockholders 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.
Ratification of the appointment of Price Waterhouse LLP requires the
affirmative vote of a majority of the Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF PRICE WATERHOUSE LLP.
<PAGE>
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.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31,1997, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF
EXHIBITS. REQUESTS SHOULD BE SENT TO STOCKHOLDER RELATIONS, MERIDIAN DATA, INC.,
5615 SCOTTS VALLEY ROAD, SUITE 200, SCOTTS VALLEY, CALIFORNIA 95066.
THE BOARD OF DIRECTORS
Dated: March 25, 1998.
<PAGE>
This Proxy is solicited on behalf of the Board of Directors
MERIDIAN
DATA, INC.
1998 ANNUAL MEETING OF STOCKHOLDERS
April 22, 1998
The undersigned stockholder of MERIDIAN DATA, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated March 25, 1998, and the 1997 Annual
Report to Stockholders and hereby appoints Gianluca U. Rattazzi and Erik E.
Miller, 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 1998 Annual Meeting of Stockholders of MERIDIAN DATA, INC. to
be held on April 22, 1998 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 AMENDMENT OF THE 1997
INCENTIVE STOCK PLAN, FOR THE AMENDMENT TO THE 1992 EMPLOYEE STOCK PURCHASE
PLAN, 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
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE 1997 INCENTIVE STOCK
PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
THEREUNDER BY 400,000 TO 1,300,000:
[ ] 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 400,000 SHARES:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS
THE INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR FISCAL 1998:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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: ____________________, 1998
-------------------------------
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.)
<PAGE>
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.
(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 forthe last market tradingday 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.
(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.
(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.
(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. 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. (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 canceled 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 canceled 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.
(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.
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 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.
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 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.
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.
<PAGE>
EXHIBIT A-1
1997 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to the Optionee continuing to be a
Service Provider on such dates.
Termination Period:
This Option may be exercised for thirty days after Optionee ceases to be
a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for such longer period as provided in the Plan. In no event
shall this Option be exercised later than the Term/Expiration Date as provided
above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to [Title] of the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check;
(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the
Optionee for more than six (6) months on the date of surrender,
and (ii)have a Fair Market Value on the date of surrender equal
to the aggregate Exercise Price of the Exercised Shares.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular federal
income tax liability upon exercise of a NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(ii) Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair
Market Value of the Shares acquired on the date of exercise and the aggregate
Exercise Price, or (B) the difference between the sale price of such Shares and
the aggregate Exercise Price. Any additional gain will be taxed as capital gain,
short-term or long-term depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: MERIDIAN DATA, INC.
- - ----------------------------------- ---------------------------------------
Signature By
- - ----------------------------------- ---------------------------------------
Print Name Title
- - ------------------------------------
Residence Address
- - ------------------------------------
<PAGE>
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------------
Spouse of Optionee
<PAGE>
EXHIBIT A-2
1997 STOCK PLAN
EXERCISE NOTICE
Meridian Data, Inc.
5615 Scotts Valley Drive
Scotts Valley, CA 95066
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Meridian Data, Inc. (the "Company") under
and pursuant to the 1997 Stock Plan (the "Plan") and the Stock Option Agreement
dated ______, 19___ (the "Option Agreement"). The purchase price for the Shares
shall be $________, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, 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 Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: MERIDIAN DATA, INC.
- - ---------------------------------- ------------------------------------
Signature By
- - ---------------------------------- ------------------------------------
Print Name Its
Address: Address:
_________________________________ Meridian Data, Inc.
_________________________________ 5615 Scotts Valley Drive
Scotts Valley, CA 95066
--------------------------------
Date Received
<PAGE>
EXHIBIT A-3
1997 STOCK PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing status as a Service
Provider (as described in the Plan and the attached Restricted Stock Purchase
Agreement), as follows:
Grant Number _________________________
Date of Grant _________________________
Price Per Share $________________________
Total Number of Shares Subject _________________________
to This Stock Purchase Right
Expiration Date: _________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the 1997 Stock Plan and the Restricted
Stock Purchase Agreement, attached hereto as Exhibit A-1, both of which are made
a part of this document. You further agree to execute the attached Restricted
Stock Purchase Agreement as a condition to purchasing any shares under this
Stock Purchase Right.
GRANTEE: MERIDIAN DATA, INC.
- - --------------------------- --------------------------------
Signature By
- - --------------------------- --------------------------------
Print Name Title
<PAGE>
EXHIBIT A-4
1997 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an Service Provider, and the Purchaser's continued participation is considered
by the Company to be important for the Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Administrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.
3. Repurchase Option.
(a) In the event the Purchaser ceases to be a Service Provider
for any or no reason (including death or disability) before all of the Shares
are released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option (the "Repurchase Option") for
a period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). The Repurchase
Option shall be exercised by the Company by delivering written notice to the
Purchaser or the Purchaser's executor (with a copy to the Escrow Holder) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
canceling an amount of the Purchaser's indebtedness to the Company equal to the
aggregate Repurchase Price, or (iii) by a combination of (i) and (ii) so that
the combined payment and cancellation of indebtedness equals the aggregate
Repurchase Price. Upon delivery of such notice and the payment of the aggregate
Repurchase Price, the Company shall become the legal and beneficial owner of the
Shares being repurchased and all rights and interests therein or relating
thereto, and the Company shall have the right to retain and transfer to its own
name the number of Shares being repurchased by the Company.
(b) Whenever the Company shall have the right to repurchase
Shares hereunder, the Company may designate and assign one or more employees,
officers, directors or shareholders of the Company or other persons or
organizations to exercise all or a part of the Company's purchase rights under
this Agreement and purchase all or a part of such Shares. If the Fair Market
Value of the Shares to be repurchased on the date of such designation or
assignment (the "Repurchase FMV") exceeds the aggregate Repurchase Price of such
Shares, then each such designee or assignee shall pay the Company cash equal to
the difference between the Repurchase FMV and the aggregate Repurchase Price of
such Shares.
4. Release of Shares From Repurchase Option.
(a) _______________________ percent (______%) of the Shares shall
be released from the Company's Repurchase Option [one year] after the Date of
Grant and __________________ percent (______%) of the Shares [at the end of each
month thereafter], provided that the Purchaser does not cease to be a Service
Provider prior to the date of any such release.
(b) Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."
(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5. Restriction on Transfer. Except for the escrow described in Section 6
or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the
provisions of this Agreement, other than by will or the laws of descent and
distribution.
6. Escrow of Shares.
(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and stock assignment shall be held by the Escrow Holder,
pursuant to the Joint Escrow Instructions of the Company and Purchaser attached
hereto as Exhibit A-3, until such time as the Company's Repurchase Option
expires. As a further condition to the Company's obligations under this
Agreement, the Company may require the spouse of Purchaser, if any, to execute
and deliver to the Company the Consent of Spouse attached hereto as Exhibit A-4.
(b) The Escrow Holder shall not be liable for any act it may do
or omit to do with respect to holding the Unreleased Shares in escrow while
acting in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises the Repurchase
Option hereunder, the Escrow Holder, upon receipt of written notice of such
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a shareholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.
7. Legends. The share certificate evidencing the Shares, if any, issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. Adjustment for Stock Split. All references to the number of Shares
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the Purchaser
(and not the Company) shall be responsible for the Purchaser's own tax liability
that may arise as a result of the transactions contemplated by this Agreement.
The Purchaser understands that Section 83 of the Internal Revenue Code of 1986,
as amended (the "Code"), taxes as ordinary income the difference between the
purchase price for the Shares and the Fair Market Value of the Shares as of the
date any restrictions on the Shares lapse. In this context, "restriction"
includes the right of the Company to buy back the Shares pursuant to the
Repurchase Option. The Purchaser understands that the Purchaser may elect to be
taxed at the time the Shares are purchased rather than when and as the
Repurchase Option expires by filing an election under Section 83(b) of the Code
with the IRS within 30 days from the date of purchase. The form for making this
election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
(a) This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules of California. This Agreement, subject to
the terms and conditions of the Plan and the Notice of Grant, represents the
entire agreement between the parties with respect to the purchase of the Shares
by the Purchaser. Subject to Section 15(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement, the terms and conditions of the Plan shall
prevail. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Agreement.
(b) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party hereto.
(c) The rights of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
(d) Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing any other provision of this
Agreement. The rights granted both parties hereunder are cumulative and shall
not constitute a waiver of either party's right to assert any other legal remedy
available to it.
(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
DATED: _____________________
PURCHASER: MERIDIAN DATA, INC.
- - ------------------------------ ----------------------------------
Signature By
- - ------------------------------ ----------------------------------
Print Name Title
<PAGE>
EXHIBIT A-5
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign and
transfer unto (----------) shares of the Common Stock of Meridian Data, Inc.
standing in my name of the books of said corporation represented by Certificate
No. _____ herewith and do hereby irrevocably constitute and appoint to transfer
the said stock on the books of the within named corporation with full power of
substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement (the "Agreement") between________________________ and
the undersigned dated ______________, 19__.
Dated: _______________, 19
Signature:______________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE>
EXHIBIT A-6
JOINT ESCROW INSTRUCTIONS
___________, 19__
Corporate Secretary
Meridian Data, Inc.
5615 Scotts Valley Drive
Scotts Valley, CA 95066
Dear :
As Escrow Agent for both Meridian Data, Inc., a California corporation
(the "Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Purchaser and you a written
notice specifying the number of shares of stock to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: Meridian Data, Inc.
5615 Scotts Valley Drive
Scotts Valley, CA 95066
PURCHASER:
ESCROW AGENT: Corporate Secretary
Meridian Data, Inc.
5615 Scotts Valley Drive
Scotts Valley, CA 95066
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of California.
Very truly yours,
MERIDIAN DATA, INC.
-------------------------------------
By
-------------------------------------
Title
PURCHASER:
-------------------------------------
Signature
-------------------------------------
Print Name
ESCROW AGENT:
- - -------------------------------------
Corporate Secretary
<PAGE>
EXHIBIT A-7
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the Company's grant to my spouse of the right to purchase
shares of Meridian Data, Inc., as set forth in the Agreement, I hereby appoint
my spouse as my attorney-in-fact in respect to the exercise of any rights under
the Agreement and agree to be bound by the provisions of the Agreement insofar
as I may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: _______________, 19
------------------------------------------
Signature of Spouse
<PAGE>
EXHIBIT A-8
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: shares (the "Shares") of the Common Stock of Meridian Data,
Inc. (the "Company").
3. The date on which the property was transferred is: , 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over
time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will
never lapse, of such property is:
$---------------.
6. The amount (if any) paid for such property is:
$---------------.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ___________________, 19____ ___________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 19____ ___________________________________________
Spouse of Taxpayer
<PAGE>
EXHIBIT B
MERIDIAN DATA, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
(As Amended Effective April 22, 1998)
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.
(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.
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 stockholder 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.
(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 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 400,000 shares,
subject to adjustment upon changes 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, 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 stockholders 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.
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 stockholders. 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 stockholder
approval in such a manner and to such a degree as required.
(b) Without stockholder 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.
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
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
<PAGE>
EXHIBIT B-1
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 stockholder 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 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)
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
<PAGE>
EXHIBIT B-2
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:____________________________
