<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______ TO _______
Commission File Number 0-23152
MOBINETIX SYSTEMS, INC.
(Name of small business issuer in its charter)
DELAWARE 33-0253408
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 OAKMEAD PARKWAY, SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (408) 524-4200
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of issuer's common stock outstanding as of December 31, 1996:
1,336,897.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
================================================================================
<PAGE> 2
2
MOBINETIX SYSTEMS, INC.
FORM 10-QSB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEET AT DECEMBER 31, 1996 3
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995 4
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 6
NOTES TO CONSOLIDATED CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURE 12
</TABLE>
<PAGE> 3
3
PART I: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MOBINETIX SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
CASH $ 1,789,164
TRADE ACCOUNTS RECEIVABLE, NET 251,202
INVENTORY 415,594
PREPAID EXPENSES AND OTHER CURRENT ASSETS 133,436
-----------
TOTAL CURRENT ASSETS 2,589,396
-----------
PROPERTY AND EQUIPMENT 357,135
LESS: ACCUMULATED DEPRECIATION (140,832)
-----------
PROPERTY AND EQUIPMENT, NET 216,303
-----------
TOTAL ASSETS $ 2,805,699
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 234,221
ACCRUED LIABILITIES 232,545
DEFERRED REVENUES 173,025
CURRENT PORTION OF CAPITAL LEASE OBLIGATIONS 25,386
-----------
TOTAL CURRENT LIABILITIES 665,177
-----------
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 8,290
-----------
STOCKHOLDERS' EQUITY:
SERIES B CONVERTIBLE PREFERRED STOCK 899
SERIES C CONVERTIBLE PREFERRED STOCK 28
COMMON STOCK 1,336
ADDITIONAL PAID-IN CAPITAL 7,361,376
ACCUMULATED DEFICIT (5,231,407)
-----------
TOTAL STOCKHOLDERS' EQUITY 2,132,232
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,805,699
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE> 4
4
MOBINETIX SYSTEMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
REVENUES
HARDWARE SALES $ 287,562 $ --
CONSULTING REVENUES, ROYALTIES AND OTHER 108,531 146,787
----------- ---------
TOTAL REVENUES 396,093 146,787
COST OF REVENUES 191,111 26,505
----------- ---------
GROSS MARGIN 204,982 120,282
----------- ---------
OPERATING EXPENSES:
SELLING, GENERAL AND ADMINISTRATIVE 569,890 111,586
RESEARCH AND DEVELOPMENT 446,575 109,180
----------- ---------
TOTAL OPERATING EXPENSES 1,016,465 220,766
----------- ---------
OPERATING LOSS (811,483) (100,484)
INTEREST EXPENSE AND OTHER (1,151) (19,971)
INTEREST INCOME 36,603 164
----------- ---------
LOSS BEFORE INCOME TAXES (776,031) (120,291)
INCOME TAXES (1,600) --
----------- ---------
NET LOSS $ (777,631) $(120,291)
=========== =========
NET LOSS PER SHARE $ (0.58) $ --
PRO FORMA NET LOSS PER SHARE $ -- $ (0.09)
WEIGHTED AVERAGE SHARES OUTSTANDING 1,336,538 --
PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING -- 1,334,275
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE> 5
5
MOBINETIX SYSTEMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
REVENUES
HARDWARE SALES $ 475,671 $ --
CONSULTING REVENUES, ROYALTIES AND OTHER 171,496 203,123
----------- ---------
TOTAL REVENUES 647,167 203,123
COST OF REVENUES 334,639 41,522
----------- ---------
GROSS MARGIN 312,528 161,601
----------- ---------
OPERATING EXPENSES:
SELLING, GENERAL AND ADMINISTRATIVE 1,038,661 195,025
RESEARCH AND DEVELOPMENT 827,383 180,411
----------- ---------
TOTAL OPERATING EXPENSES 1,866,044 375,436
----------- ---------
OPERATING LOSS (1,553,516) (213,835)
INTEREST EXPENSE AND OTHER (2,139) (39,122)
INTEREST INCOME 78,444 446
----------- ---------
LOSS BEFORE INCOME TAXES (1,477,211) (252,511)
INCOME TAXES (2,400) (800)
----------- ---------
NET LOSS $(1,479,611) $(253,311)
=========== =========
NET LOSS PER SHARE $ (1.11) $ --
PRO FORMA NET LOSS PER SHARE $ -- $ (0.19)
WEIGHTED AVERAGE SHARES OUTSTANDING 1,336,448 --
PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING -- 1,334,275
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE> 6
6
MOBINETIX SYSTEMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES (1,905,128) (263,616)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF PROPERTY AND EQUIPMENT (121,702) (3,099)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES (121,702) (3,099)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS - NOTES PAYABLE -- 145,000
ISSUANCE OF SERIES B PREFERRED STOCK 1,659,469 --
SERIES B PREFERRED STOCK ISSUANCE COSTS (281,950) --
PROCEEDS FROM SALE OF COMMON STOCK 107 --
---------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,377,626 145,000
----------- ---------
NET (DECREASE) IN CASH (649,204) (121,715)
CASH AT BEGINNING OF PERIOD 2,438,368 76,814
----------- ---------
CASH AT END OF PERIOD $ 1,789,164 $ (44,901)
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID FOR INCOME TAXES $ 2,400 $ 800
CASH PAID FOR INTEREST $ 2,394 --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE> 7
7
MOBINETIX SYSTEMS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
THE FINANCIAL INFORMATION INCLUDED HEREIN FOR THE THREE-MONTH AND SIX-MONTH
PERIODS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995 IS UNAUDITED; HOWEVER,
SUCH INFORMATION REFLECTS ALL ADJUSTMENTS CONSISTING ONLY OF NORMAL RECURRING
ADJUSTMENTS WHICH ARE, IN THE OPINION OF MANAGEMENT, NECESSARY FOR A FAIR
PRESENTATION OF THE FINANCIAL POSITION, RESULTS OF OPERATIONS AND CASH FLOWS FOR
THE INTERIM PERIODS.
AS DESCRIBED IN THE REGISTRANT'S FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 1996,
MOBINETIX IN ITS PRESENT FORM IS THE RESULT OF AN ACQUISITION AGREEMENT BETWEEN
PENULTIMATE, INC. AND PENWARE, INC. FOR ACCOUNTING PURPOSES, THE ACQUISITION,
WHICH WAS EFFECTIVE JUNE 10, 1996, WAS TREATED AS A REVERSE ACQUISITION. THE
HISTORICAL OPERATIONS OF PENWARE, INC. PRIOR TO THE REVERSE ACQUISITION HAVE
BEEN PRESENTED AS THE RESULTS OF OPERATIONS FOR THE COMBINED COMPANIES.
ON AUGUST 26, 1996, PENULTIMATE CHANGED ITS CORPORATE NAME. THE NAME OF THE
REGISTRANT IS NOW MOBINETIX SYSTEMS, INC. ("MOBINETIX," OR THE "COMPANY.")
THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS PRESENTED HEREIN HAVE BEEN
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR INTERIM
FINANCIAL INFORMATION AND THE INSTRUCTIONS TO FORM 10-QSB. THESE INTERIM
FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED IN THE FORM 10-KSB OF
MOBINETIX FOR THE YEAR ENDED JUNE 30, 1996.
THE RESULTS OF OPERATIONS FOR THE INTERIM PERIODS PRESENTED ARE NOT NECESSARILY
INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR.
ACCOUNTING POLICIES
REFERENCE IS MADE TO NOTE 1 OF NOTES TO FINANCIAL STATEMENTS IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
NET LOSS PER SHARE
DUE TO THE SIGNIFICANT CHANGE IN THE COMPANY'S CAPITAL STRUCTURE THAT OCCURRED
IN CONNECTION WITH THE REVERSE ACQUISITION OF PENULTIMATE, INC. BY PENWARE,
INC., IN JUNE 1996, PRO FORMA NET LOSS PER SHARE FOR CALENDAR 1995 HAS BEEN
CALCULATED USING PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING. THIS CALCULATION
ASSUMES THAT ALL OF THE COMMON SHARES ISSUED AS PART OF THE REVERSE ACQUISITION
WERE OUTSTANDING FOR ALL PERIODS PRESENTED.
NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE FOR CALENDAR 1996 IS BASED ON
THE WEIGHTED AVERAGE COMMON SHARES OUTSTANDING AND DILUTIVE COMMON EQUIVALENT
SHARES. COMMON EQUIVALENT SHARES RESULT FROM THE ASSUMED EXERCISE OF OUTSTANDING
STOCK OPTIONS. THERE WAS NO DILUTIVE EFFECT FROM COMMON EQUIVALENT SHARES FOR
THE PERIODS PRESENTED.
<PAGE> 8
8
INVENTORIES
CLASSIFICATION OF INVENTORIES IS AS FOLLOWS:
<TABLE>
<CAPTION>
DEC. 31,
1996
--------
<S> <C>
FINISHED GOODS $ 17,906
WORK IN PROCESS --
RAW MATERIALS 397,688
---------
TOTAL $ 415,594
=========
</TABLE>
PREFERRED STOCK
IN OCTOBER 1996, THE COMPANY EFFECTED REVERSE STOCK SPLITS OF 1:2 AND 1:4 FOR
THE SERIES B AND SERIES C PREFERRED STOCK, RESPECTIVELY. THE FINANCIAL
STATEMENTS HAVE BEEN ADJUSTED TO REFLECT THE SPLITS.
<PAGE> 9
9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE ACCOMPANYING
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF MOBINETIX SYSTEMS, INC.
AND ITS WHOLLY OWNED SUBSIDIARY PENWARE, INC., INCLUDING THE NOTES THERETO (SEE
PART I, ITEM 1). THIS ANALYSIS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH
ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED.
BACKGROUND
MOBINETIX SPECIALIZES IN INTERACTIVE TRANSACTION SYSTEMS. THE COMPANY DEVELOPS
AND MARKETS A LINE OF PENWARE(R) BRAND TRANSACTION TERMINALS WITH INTEGRATED
SIGNATURE CAPTURE CAPABILITIES TO THE RETAIL, HOSPITALITY, FINANCIAL SERVICES,
INSURANCE AND IDENTIFICATION-SECURITY INDUSTRIES. SALES OF HARDWARE DEVICES,
SUCH AS THE PENWARE 100 SIGNATURE CAPTURE PAD, COMMENCED IN THE QUARTER ENDED
MARCH 31, 1996; REVENUES IN PRIOR PERIODS CONSISTED OF SOFTWARE CONSULTING AND
ROYALTY REVENUES, MAINLY FROM MANUFACTURERS OF PERSONAL DIGITAL ASSISTANTS
(PDAS).
RESULTS OF OPERATIONS (THREE MONTHS ENDED DECEMBER 1996 COMPARED TO THREE
MONTHS ENDED DECEMBER 1995)
THE 170% INCREASE IN REVENUES FROM THE SECOND QUARTER OF FISCAL 1996 TO THE
SECOND QUARTER OF FISCAL 1997 IS MAINLY THE RESULT OF SALES OF SIGNATURE
TRANSACTION HARDWARE DEVICES, WHICH WERE NOT PART OF THE COMPANY'S PRODUCT
PORTFOLIO IN FISCAL 1996.
COST OF SALES INCREASED BY 621% OVER THIS PERIOD, SIMILARLY REFLECTING THE
SIGNIFICANT CHANGE IN PRODUCT MIX. IN ADDITION TO CONSUMPTION OF MATERIALS FOR
TERMINAL PRODUCTS, COST OF SALES IN THE FIRST QUARTER OF FISCAL 1997 INCLUDED
PROVISIONS FOR ROYALTIES AND FUTURE WARRANTY COSTS.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES INCREASED BY 411% FROM 1996 TO
1997. THE GROWTH IS LARGELY THE RESULT OF HIGHER PERSONNEL EXPENSES TO SUPPORT
BUSINESS GROWTH, INCLUDING TARGETED NEW HIRES IN SUCH AREAS AS EXECUTIVE
MANAGEMENT, FIELD SALES, PURCHASING AND PRODUCTION CONTROL AND FINANCE. OTHER
AREAS OF INCREASED SPENDING INCLUDED LEGAL FEES, TRAVEL AND TRADE SHOWS, AND
PUBLIC RELATIONS.
THE 309% PERCENT YEAR-TO-YEAR INCREASE IN RESEARCH AND DEVELOPMENT EXPENSE IS
ALSO LARGELY ATTRIBUTABLE TO PERSONNEL. TO ENABLE THE DESIGN, DEVELOPMENT AND
PRODUCTION RAMP OF HARDWARE DEVICES, WHILE CONTINUING TO SUPPORT SOFTWARE
DEVELOPMENT, THE COMPANY SIGNIFICANTLY EXPANDED ITS ENGINEERING STAFF, INCLUDING
MANAGEMENT. EXPENSES FOR CONSULTING AND ENGINEERING TOOLS AND MATERIALS ALSO
INCREASED FROM THE SECOND QUARTER OF FISCAL 1996 TO THE SECOND QUARTER 1997 AS
PART OF THE COMPANY'S HARDWARE DEVELOPMENT AND DESIGN EFFORTS.
THE INCREASE IN INTEREST INCOME IS THE RESULT OF RETURNS ON INVESTED PROCEEDS
FROM THE COMPANY'S PRIVATE PLACEMENTS OF PREFERRED STOCK IN MAY, JUNE AND JULY
1996. THESE PROCEEDS ARE INVESTED IN MONEY MARKET INSTRUMENTS.
<PAGE> 10
10
INTEREST AND OTHER EXPENSE DECLINED BY $18,820 FROM FISCAL 1996 TO FISCAL 1997,
DUE TO THE CONVERSION OF DEBT. IN JUNE 1996, THE COMPANY CONVERTED A $1 MILLION
PROMISSORY NOTE, WHICH HAD BEEN OUTSTANDING AT DECEMBER 31, 1995, TO PREFERRED
STOCK. THE COMPANY HAD NO BORROWINGS DURING THE SECOND QUARTER OF FISCAL 1997.
RESULTS OF OPERATIONS (SIX MONTHS ENDED DECEMBER 1996 COMPARED TO SIX MONTHS
ENDED DECEMBER 1995)
CHANGES IN REVENUES, COSTS AND EXPENSES FROM THE FIRST HALF OF FISCAL 1996 TO
THE FIRST HALF OF FISCAL 1997 RESULT FROM ESSENTIALLY THE SAME FACTORS AND
TRENDS AS THOSE OUTLINED ABOVE FOR THE THREE-MONTH COMPARISON PERIOD. FOR THE
SIX MONTH COMPARISON PERIODS, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND
RESEARCH AND DEVELOPMENT EXPENSES INCREASED BY 433% AND 359%, RESPECTIVELY.
THE RATE OF GROWTH IN PERSONNEL-RELATED SPENDING INCREASED DURING THE SECOND
QUARTER OF FISCAL 1997 COMPARED TO THE FIRST QUARTER OF FISCAL 1997 DUE TO NEW
HIRES, MAINLY IN ENGINEERING, AND RELOCATION EXPENSES.
CASH AND SOURCES OF LIQUIDITY
THE COMPANY FINANCED OPERATIONS AND OPERATING EXPENDITURES DURING THE FIRST SIX
MONTHS OF FISCAL 1997 PRIMARILY WITH PROCEEDS FROM THE PRIVATE SALE OF PREFERRED
STOCK IN MAY, JUNE AND JULY 1996.
FINANCING ACTIVITIES, CONSISTING MAINLY OF THE SALE OF PREFERRED STOCK,
GENERATED $1,377,626 IN CASH DURING THE FIRST HALF OF FISCAL 1997. THE
COMPANY'S OPERATING ACTIVITIES CONSUMED $1,905,128 IN CASH DURING THIS PERIOD,
REFLECTING HIGHER OPERATING EXPENSES AND WORKING CAPITAL REQUIREMENTS,
PARTICULARLY FOR INVENTORY.
INVESTING ACTIVITIES DURING THE FIRST SIX MONTHS OF FISCAL 1997 CONSISTED MAINLY
OF EXPENDITURES FOR LEASEHOLD IMPROVEMENTS AT THE COMPANY'S NEW FACILITY IN
SUNNYVALE, CALIFORNIA AND MANUFACTURING AND ENGINEERING TEST EQUIPMENT.
AS OF DECEMBER 31, 1996, THE COMPANY'S PRINCIPAL SOURCES OF LIQUIDITY INCLUDE
CASH OF $1.8 MILLION. THE COMPANY HAD NO LONG- OR SHORT-TERM DEBT AND NO
SIGNIFICANT CAPITAL COMMITMENTS OTHER THAN THOSE UNDER CAPITAL LEASES.
OUTLOOK
THE COMPANY'S CURRENT FORECASTS INDICATE THAT EXISTING CASH RESOURCES ARE
SUFFICIENT TO SUPPORT OPERATIONS INTO THE FOURTH QUARTER OF FISCAL 1997. WORKING
CAPITAL REQUIREMENTS ARE EXPECTED TO CONTINUE TO GROW SIGNIFICANTLY IN THE
SECOND HALF OF FISCAL 1997 AS THE COMPANY RAMPS UP PRODUCTION AND SALES VOLUMES
OF SIGNATURE TRANSACTION DEVICES. MANAGEMENT IS INVESTIGATING CREDIT LINE
FINANCING AND ADDITIONAL SALES OF EQUITY, BUT THERE IS NO ASSURANCE THAT
ADDITIONAL FUNDING WILL BE AVAILABLE.
MOBINETIX BELIEVES THAT IT HAS THE TECHNICAL AND MARKETING SKILLS AND PRODUCT
OFFERINGS NECESSARY FOR FUTURE SUCCESS. HOWEVER, THE COMPANY HAS NOT YET
ACHIEVED PROFITABILITY AND SALES TRENDS ARE INHERENTLY DIFFICULT TO PREDICT AT
THIS STAGE OF DEVELOPMENT. SALES FORECAST SHORTFALLS, DELAYED PRODUCT
INTRODUCTIONS, AND MANUFACTURING AND FINANCING CONSTRAINTS, TOGETHER WITH OTHER
RISK FACTORS, COULD LEAD TO ADVERSE FLUCTUATIONS IN REVENUES AND MARGINS IN ANY
PARTICULAR QUARTER.
<PAGE> 11
11
PART II: OTHER INFORMATION
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) THE COMPANY'S ANNUAL MEETING OF STOCKHOLDERS WAS HELD ON DECEMBER 2,
1996.
(b) ALL DIRECTOR CANDIDATES, PAUL C. DALI, AZIZ VALLIANI, AND NAZIM KAREEMI,
WERE DULY ELECTED AT THE MEETING.
(c)i. EACH DIRECTOR NOMINEE RECEIVED 3,376,806 VOTES "FOR" ELECTION. THERE
WERE NO VOTES "AGAINST", NONE WITHHELD, AND NO ABSTENTIONS OR BROKER
NON-VOTES.
(c)ii. THE STOCKHOLDERS RATIFIED THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS FOR THE YEAR ENDED JUNE 30, 1997. THE VOTE WAS
3,376,806 VOTES FOR RATIFICATION, NONE AGAINST AND NONE ABSTAINING.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.1 1996 STOCK PLAN AND RELATED AGREEMENTS.
27 FINANCIAL DATA SCHEDULE
(b) REPORTS ON FORM 8-K
THERE WERE NO REPORTS ON FORM 8-K FILED DURING THE QUARTER ENDED DECEMBER
31, 1996.
<PAGE> 12
12
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED BY THE UNDERSIGNED THEREUNTO
DULY AUTHORIZED.
MOBINETIX SYSTEMS, INC.
DATE: FEBRUARY 13, 1997 BY: /S/ DAVID M. LICURSE, SR.
------------------------
DAVID M. LICURSE, SR.
CHIEF FINANCIAL OFFICER AND
VICE PRESIDENT OF OPERATIONS
(PRINCIPAL ACCOUNTING OFFICER)
<PAGE> 13
EXHIBIT INDEX
Exhibit 10.1 1996 Stock Plan and related agreements
Exhibit 27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
MOBINETIX SYSTEMS, INC.
1996 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
o to attract and retain the best available personnel
for positions of substantial responsibility,
o to provide additional incentive to Employees,
Directors and Consultants, and
o 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 Mobinetix Systems, Inc., a Delaware
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.
<PAGE> 2
(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
A Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between locations of
the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value shall be determined in good faith by
the Administrator.
(n) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
-2-
<PAGE> 3
(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 1996 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.
-3-
<PAGE> 4
(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 1,500,000 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.
-4-
<PAGE> 5
(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.
-5-
<PAGE> 6
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.
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
-6-
<PAGE> 7
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;
-7-
<PAGE> 8
(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.
-8-
<PAGE> 9
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.
-9-
<PAGE> 10
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,
-10-
<PAGE> 11
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
-11-
<PAGE> 12
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
-12-
<PAGE> 13
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.
-13-
<PAGE> 14
MOBINETIX SYSTEMS, INC.
1996 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
Name of Optionee
- ----------------
500 Oakmead Parkway
Sunnyvale, CA 94086
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option
Agreement, as follows:
<TABLE>
<S> <C>
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: 10 years from date of grant
</TABLE>
Exercise and Vesting Schedule:
This Option is exercisable immediately, in whole or in part,
conditioned upon Optionee entering into a Restricted Stock Purchase Agreement
with respect to any unvested Option Shares. The Shares subject to this Option
shall vest and/or be released from the Company's repurchase option, as set
forth in the Restricted Stock Purchase Agreement, according to the following
schedule:
<PAGE> 15
25% of the Shares subject to Option shall vest on the Vesting
Commencement Date. Thereafter, 1/48 of the Shares subject to the Option shall
vest monthly.
Termination Period:
You may exercise this Option for not less than 30 nor more than 90
days after your employment or consulting relationship with the Company
terminates, or for such longer period upon your death or disability as provided
in this Option Agreement. If your status changes from Employee to Consultant
or Consultant to Employee, this Option Agreement shall remain in effect. In no
case may you exercise this Option after 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 14(b) 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 ISO as defined in
Section 422 of the Code. However, if this Option is intended to be an ISO, 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. This Option shall be exercisable during
its term in accordance with the provisions of Section 9 of the Plan as follows:
i. Right to Exercise.
(a) Subject to subsections 2(i)(b) through
2(i)(e) below, this Option shall be exercisable cumulatively according to the
vesting schedule set out in the Notice of Grant. Alternatively, at the
election of the Optionee, this option may be exercised in whole or in part at
any time as to Shares which have not yet vested. Any unvested Shares shall be
subject to the Company's repurchase right (as set forth in the Restricted Stock
Purchase Agreement, attached hereto as Exhibit D-1).
(b) As a condition to exercising this Option with
respect to unvested Shares, the Optionee shall execute the Restricted Stock
Purchase Agreement.
(c) This Option may not be exercised for a
fraction of a Share.
-2-
<PAGE> 16
(d) In the event of Optionee's death, disability
or other termination of Optionee's employment or consulting relationship, the
exercisability of the Option is governed by the applicable provisions of the
Plan and this Option Agreement.
(e) In no event may this Option be exercised
after the date of expiration of the term of this Option as set forth in the
Notice of Grant.
(ii) 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 signed by the Optionee and, if applicable, together with an
executed copy of the Restricted Stock Purchase Agreement, shall be delivered in
person or by certified mail to the Secretary of the Company. The Exercise
Notice and, if applicable, Restricted Stock Purchase Agreement 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 and, if applicable, Restricted
Stock Purchase Agreement accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an
Option unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on which
the Option is exercised with respect to such 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:
(i) cash; or
(ii) check; or
(iii) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(iv) surrender of other shares of Common Stock of the
Company which (A) in the case of Shares acquired pursuant to the exercise of a
Company option, have been owned by the Optionee for more than six (6) months on
the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the Exercise Price of the Shares as to which the Option is
being exercised; or
-3-
<PAGE> 17
(v) delivery of Optionee's promissory note (the
"Note") in the form attached hereto as Exhibit C, in the amount of the
aggregate Exercise Price of the Exercised Shares together with the execution
and delivery by the Optionee of the Security Agreement attached hereto as
Exhibit B. The Note shall bear interest at a rate no less than the "applicable
federal rate" prescribed under the Code and its regulations at time of
purchase, and shall be secured by a pledge of the Shares purchased by the Note
pursuant to the Security Agreement.
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 and state 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.
(i) Exercising the Option.
(a) Nonstatutory Stock Option. The
Optionee may incur regular federal income tax and California 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.
(b) Incentive Stock Option. If this
Option qualifies as an ISO, the Optionee will have no regular federal income
tax or California 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 undergoes a change of status from Employee to Consultant, 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 ninety-first (91st) day following such change
of status.
-4-
<PAGE> 18
(ii) Disposition of Shares.
(a) 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.
(b) 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.
(iii) 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 California
law except for that body of law pertaining to conflict of laws.
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.
-5-
<PAGE> 19
OPTIONEE: MOBINETIX SYSTEMS, INC.
By:
- -------------------------------------- -----------------------------
Signature Aziz Valliani
Title: President
- --------------------------------------
Print Name
- --------------------------------------
Residence Address
- --------------------------------------
-6-
<PAGE> 20
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
-7-
<PAGE> 21
EXHIBIT A
MOBINETIX SYSTEMS, INC.
1996 STOCK PLAN
EXERCISE NOTICE
MOBINETIX SYSTEMS, INC.
500 Oakmead Parkway
Sunnyvale, CA 94086
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________,
199__, the undersigned ("Purchaser") hereby elects to purchase ______________
shares (the "Shares") of the Common Stock of MobiNetix Systems, Inc. (the
"Company") under and pursuant to the 1996 Stock Plan (the "Plan") and the Stock
Option Agreement dated _____________, 1996 (the "Option Agreement"). The
purchase price for the Shares shall be $4.25, 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 stock certificate evidencing such 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. A share certificate for the number of 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 the stock certificate is issued, except as provided in
Section 12 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
<PAGE> 22
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 California law except for that body of law
pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: MOBINETIX SYSTEMS, INC.
By:
- -------------------------------------- -----------------------------
Signature Aziz Valliani
Its: President
- --------------------------------------
Print Name
Address: Address:
500 Oakmead Parkway
- -------------------------------------- Sunnyvale, CA 94086
- --------------------------------------
-2-
<PAGE> 23
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, 19___ between
MobiNetix Systems, Inc., a Delaware corporation ("Pledgee"), and
_________________________ ("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated December __, 1996 (the "Option"), between Pledgor and Pledgee
under Pledgee's 1996 Stock Plan, and Pledgor's election under the terms of the
Option to pay for such shares with his promissory note (the "Note"), Pledgor
has purchased _________ shares of Pledgee's Common Stock (the "Shares") at a
price of $4.25 per share, for a total purchase price of $__________. The Note
and the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In
consideration of the transfer of the Shares to Pledgor under the Option
Agreement, Pledgor, pursuant to the California Commercial Code, hereby pledges
all of such Shares (herein sometimes referred to as the "Collateral")
represented by certificate number ______, duly endorsed in blank or with
executed stock powers, and herewith delivers said certificate to the Secretary
of Pledgee ("Pledgeholder"), who shall hold said certificate subject to the
terms and conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment
for use in transferring all or a portion of the Shares to Pledgee if, as and
when required pursuant to this Security Agreement) shall be held by the
Pledgeholder as security for the repayment of the Note, and any extensions or
renewals thereof, to be executed by Pledgor pursuant to the terms of the
Option, and the Pledgeholder shall not encumber or dispose of such Shares
except in accordance with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the
principal sum of the Note secured hereby, together with interest thereon, at
the time and in the manner provided in the Note.
b. Encumbrances. The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.
<PAGE> 24
c. Margin Regulations. In the event that Pledgee's
Common Stock is now or later becomes margin-listed by the Federal Reserve Board
and Pledgee is classified as a "lender" within the meaning of the regulations
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G"),
Pledgor agrees to cooperate with Pledgee in making any amendments to the Note
or providing any additional collateral as may be necessary to comply with such
regulations.
3. Voting Rights. During the term of this pledge and so long as
all payments of principal and interest are made as they become due under the
terms of the Note, Pledgor shall have the right to vote all of the Shares
pledged hereunder.
4. Stock Adjustments. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of Pledgee, all new, substituted and
additional shares or other securities issued by reason of any such change shall
be delivered to and held by the Pledgee under the terms of this Security
Agreement in the same manner as the Shares originally pledged hereunder. In
the event of substitution of such securities, Pledgor, Pledgee and Pledgeholder
shall cooperate and execute such documents as are reasonable so as to provide
for the substitution of such Collateral and, upon such substitution, references
to "Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of
this pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held
under the terms of this Security Agreement in the same manner as the Shares
pledged.
6. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set
forth in the Option or contained in this Security Agreement for a period of 10
days after written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the
California Commercial Code.
7. Release of Collateral. Subject to any applicable contrary
rules under Regulation G, there shall be released from this pledge a portion of
the pledged Shares held by Pledgeholder here-
-2-
<PAGE> 25
under upon payments of the principal of the Note. The number of the pledged
Shares which shall be released shall be that number of full Shares which bears
the same proportion to the initial number of Shares pledged hereunder as the
payment of principal bears to the initial full principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not
sell, withdraw, pledge, substitute or otherwise dispose of all or any part of
the Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the
payment of all indebtedness secured hereby, at which time the remaining pledged
stock shall be promptly delivered to Pledgor, subject to the provisions for
prior release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for
the property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due
and payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee
agree that the enforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of
the terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted
and governed under the laws of the State of California.
-3-
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By: _________________________________
_____________________________________
Print Name
Address:
_____________________________________
_____________________________________
"PLEDGEE" MOBINETIX SYSTEMS, INC.,
a Delaware corporation
By: _________________________________
Title: __________________________
"PLEDGEHOLDER" _____________________________________
Secretary of
MobiNetix Systems, Inc.
-4-
<PAGE> 27
EXHIBIT C
NOTE
Sunnyvale, California
$_______________
______________, 19___
FOR VALUE RECEIVED, _______________ promises to pay to MobiNetix
Systems, Inc., a Delaware corporation (the "Company"), or order, the principal
sum of _______________________ ($_____________), together with interest on the
unpaid principal hereof from the date hereof at the rate of _______________
percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on __________, 19___.
Should the undersigned fail to make full payment of principal or interest for a
period of 10 days or more after the due date thereof, the whole unpaid balance
on this Note of principal and interest shall become immediately due at the
option of the holder of this Note. Payments of principal and interest shall be
made in lawful money of the United States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of December
__, 1996. This Note is secured in part by a pledge of the Company's Common
Stock under the terms of a Security Agreement of even date herewith and is
subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event the undersigned shall cease to be an employee or consultant
of the Company for any reason, this Note shall, at the option of the Company,
be accelerated, and the whole unpaid balance on this Note of principal and
accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
____________________________________
____________________________________
<PAGE> 28
EXHIBIT D-1
1996 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 Employee or Consultant of the Company, 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's Continuous Status as an
Employee or Consultant terminates 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
<PAGE> 29
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) Twenty-Five percent (25%) of the Shares shall be released
from the Company's Repurchase Option one year after the Date of Grant and 1/48
of the Shares at the end of each month thereafter, provided that the
Purchaser's Continuous Status as an Employee or Consultant has not terminated
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 D-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 D-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
D-4.
-2-
<PAGE> 30
(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 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
-3-
<PAGE> 31
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 laws of the State
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 14(b) 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.
-4-
<PAGE> 32
(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 AN
EMPLOYEE OR CONSULTANT 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 AN EMPLOYEE OR CONSULTANT 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 EMPLOYMENT OR CONSULTING
RELATIONSHIP 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: MOBINETIX SYSTEMS, INC.
By:
Signature
Title:
Print Name
-5-
<PAGE> 33
EXHIBIT D-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto _________________________________________________
______________________________________________ (__________) shares of the
Common Stock of MobiNetix Systems, 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> 34
EXHIBIT D-3
JOINT ESCROW INSTRUCTIONS
_____________, 19__
Corporate Secretary
MobiNetix Systems, Inc.
500 Oakmead Parkway
Sunnyvale, CA 94086
Dear _________________:
As Escrow Agent for both MobiNetix Systems, Inc., a Delaware 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
<PAGE> 35
certificates representing so many shares of stock as are not then subject to
the Company's Repurchase Option. Within 90 days after cessation of Purchaser's
continuous employment by or services to the Company, or any parent or
subsidiary of the Company, 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.
-2-
<PAGE> 36
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: MobiNetix Systems, Inc.
500 Oakmead Parkway
Sunnyvale, CA 94086
PURCHASER:
----------------------------------------
----------------------------------------
----------------------------------------
ESCROW AGENT: Corporate Secretary
MobiNetix Systems, Inc.
500 Oakmead Parkway
Sunnyvale, CA 94086
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.
-3-
<PAGE> 37
18. These Joint Escrow Instructions shall be governed by, and
construed and enforced in accordance with, the laws of the State of California.
Very truly yours,
MOBINETIX SYSTEMS, INC.
By: _______________________________________
Title: ____________________________________
PURCHASER:
___________________________________________
(Signature)
___________________________________________
(Typed or Printed Name)
ESCROW AGENT:
__________________________________
Corporate Secretary
-4-
<PAGE> 38
EXHIBIT D-4
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 MobiNetix Systems, 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> 39
EXHIBIT D-5
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: 19___
2. The property with respect to which the election is made is described as
follows: ___________________ shares (the "Shares") of the Common Stock
of MobiNetix Systems, 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1996
<PERIOD-START> JUL-01-1996 JUL-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 1789164 0
<SECURITIES> 0 0
<RECEIVABLES> 251202 0
<ALLOWANCES> 0 0
<INVENTORY> 415594 0
<CURRENT-ASSETS> 2589396 0
<PP&E> 357135 0
<DEPRECIATION> 140832 0
<TOTAL-ASSETS> 2805699 0
<CURRENT-LIABILITIES> 665177 0
<BONDS> 0 0
0 0
927 0
<COMMON> 1336 0
<OTHER-SE> 2129969 0
<TOTAL-LIABILITY-AND-EQUITY> 2805699 0
<SALES> 647167 203123
<TOTAL-REVENUES> 647167 203123
<CGS> 334639 41522
<TOTAL-COSTS> 334639 41522
<OTHER-EXPENSES> 827383 180411
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2139 39122
<INCOME-PRETAX> (1477211) (252511)
<INCOME-TAX> 2400 800
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1479611) (253311)
<EPS-PRIMARY> (1.11) (.19)
<EPS-DILUTED> 0 0
</TABLE>
