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As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 333- _________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 205499
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MUSTANG SOFTWARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
California 7372 77-0204718
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
or Organization) Classification Code Number)
</TABLE>
6200 Lake Ming Road
Bakersfield, California 93306
(Address of Principal Executive Offices)
EMPLOYEE STOCK PURCHASE PLAN
(Full Title of the Plan)
James A. Harrer, President and C.E.O.
Mustang Software Incorporated
6200 Lake Ming Road
Bakersfield, California 93306
(805) 873-2500
(Name, Address, and Telephone Number, Including Area Code, of Agent for
Service)
Copies to:
Mark A. Klein, Esq.
Freshman, Marantz, Orlanski,
Cooper & Klein
9100 Wilshire Boulevard, 8-East
Beverly Hills, California 90212
(310) 273-1870
Fax: (310) 274-8357
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [#]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Amount to be Price per Offering Registration
Title of Securities to be Registered Registered Share(1) Price(1) Fee
------------------------------------ ------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock, no par value . . . . . . . 50,000 shares $4.00 $200,000 $68.97
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(h)(1).
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing information specified in this Part I are
being separately provided to the Registrant's employees, officers, directors
and consultants as specified by Rule 428(b)(1).
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in paragraphs (a) through (c) below are hereby
incorporated by reference in this Registration Statement. All documents
subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates that all securities
offered herein have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereto from the date of filing of such
documents.
(a) The Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
(b) All reports filed by Registrant pursuant to Sections 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by the
financial statements included in the above- mentioned Annual Report on Form
10-KSB.
(c) The section of the Registrant's Prospectus dated April 5, 1995
entitled "Description of Capital Stock -- Common Stock."
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation and By-Laws provide for
indemnification of the officers and directors of the Registrant to the full
extent permitted by law. The General Corporation Law of the State of
California permits a corporation to limit, under certain circumstances, a
director's liability for monetary damages and actions brought by or in the
right of the corporation. The Registrant's Articles of Incorporation also
provide for the elimination of the liability of directors from monetary damages
to the full extent permitted by law.
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The Registrant has entered into agreements to indemnify its directors
and officers in addition to the indemnification provided for in its Articles of
Incorporation and By-Laws. These agreements, among other things, indemnify the
Registrant's directors and officers for certain expenses (including attorneys'
fees), judgments, fines and settlement amounts incurred in any action or
proceeding, including any action by or in the right of the Registrant, on
account of services as a director or officer of the Registrant, as a director
or officer of any subsidiary of the Registrant, or as a director or officer of
any other enterprise to which the person provides services at the request of
the Registrant.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
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<CAPTION>
Exhibit
Numbers
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4.1 Mustang Software, Inc. Employee Stock Purchase Plan.
4.2 Form of Subscription Agreement under Employee Stock Purchase Plan
5 Opinion of Freshman, Marantz, Orlanski, Cooper & Klein.
24.1 Consent of Freshman, Marantz, Orlanski, Cooper & Klein (included in Exhibit 5).
24.2 Consent of Independent Public Accountants
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
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The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions referenced in
Item 6 of this Registration Statement or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered hereunder, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Saugus, State of California, on this 27th day of
June, 1996.
MUSTANG SOFTWARE, INC.
By: /s/ JAMES A. HARRER
--------------------------------
James A. Harrer
President, Chief Executive
Officer and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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Signature Title Date
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<S> <C> <C>
/s/ JAMES A. HARRER President, Chief Executive Officer
- -------------------------------------------------- and Chairman of the Board
James A. Harrer (Principal Executive Officer) June 27, 1996
/s/ RICHARD J. HEMING Vice President, Chief Operations
- -------------------------------------------------- Officer, Secretary and Director June 27, 1996
Richard J. Heming
/s/ C. SCOTT HUNTER Vice President of Engineering and
- -------------------------------------------------- Director June 27, 1996
C. Scott Hunter
/s/ DONALD M. LEONARD Vice President Finance and Chief
- -------------------------------------------------- Financial Officer
Donald M. Leonard (Principal Financial and
Accounting Officer) June 27, 1996
/s/ JAMES STANLEY ("STAN") HARRIS
- --------------------------------------------------
James Stanley ("Stan") Harris Director June 27, 1996
/s/ STANLEY A. HIRSCHMAN
- --------------------------------------------------
Stanley A. Hirschman Director June 27, 1996
/s/ MICHAEL S. NOLING
- --------------------------------------------------
Michael S. Noling Director June 27, 1996
</TABLE>
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EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Page
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<S> <C> <C>
4.1 Mustang Software, Inc. Employee Stock Purchase Plan.
4.2 Form of Subscription Agreement under Employee Stock Purchase Plan
5 Opinion of Freshman, Marantz, Orlanski, Cooper & Klein.
24.1 Consent of Freshman, Marantz, Orlanski, Cooper & Klein (included
in Exhibit 5).
24.2 Consent of Independent Public Accountants
</TABLE>
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EXHIBIT 4.1
MUSTANG SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the Employee Stock
Purchase Plan (herein called the "Plan") of Mustang Software, Inc. (herein
called the "Company").
1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through payroll deductions. It is the intention
of the Company that the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the Common Stock, no par value, of
the Company.
(d) "Compensation" means base pay, plus any amounts
attributable to overtime, shift premium, incentive compensation, bonuses and
commissions (except to the extent that the exclusion of such item for every
Employee is specifically directed by the Board or its committee).
(e) "Continuous Status as an Employee" shall mean the
absence of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in the
case of a leave of absence agreed to in writing by the Company, provided that
such leave is for a period of not more than 90 days or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
(f) "Designated Subsidiaries" means the Subsidiaries which
have been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" means any person, including an officer, who
is customarily employed for at least twenty (20) hours per week and more than
five (5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(h) "Exercise Date" means the last day of each offering
period of the Plan.
(i) "Offering Date" means the first day of each offering
period of the Plan.
(j) "Subsidiary" means any corporation, domestic or foreign,
in which the Company owns, directly or indirectly, 50% or more of the voting
shares.
3. Eligibility.
(a) General Rule. Any person who is an Employee, as defined
in paragraph 2, on the Offering Date of given offering period shall be
eligible to participate in such offering period under the Plan, subject to the
requirements of paragraph 5 (a) and the limitations imposed by Section 423 (b)
of the Code.
(b) Exceptions. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan if (i)
immediately after the grant, such Employee (or any other person whose stock
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ownership would be attributed to such Employee pursuant to Section 425 (d) of
the Code) would own shares and/or hold outstanding options to purchase shares
possessing five percent (5%) or more of the total combined voting power or
value of all classes of shares of the Company or of any subsidiary of the
Company, or (ii) the rate of withholding under such option would permit the
employee's rights to purchase shares under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its subsidiaries to
accrue (i.e., become exercisable) at a rate which exceeds Twenty-five Thousand
Dollars ($25,000) of fair market value of such shares (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offerings. The plan shall be implemented by consecutive
offering periods of approximately six months, with each offering period
commencing on or about the first business day following each July 1 and January
1. The Board shall have the power to change the duration of offering periods,
including the commencement dates thereof, with respect to future offerings
without shareholder approval, if such change is announced at least fifteen (15)
days prior to the scheduled beginning of the first offering period to be
affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's payroll
office not less than 7 days prior to the Offering Date of the first offering
period with respect to which it is to be effective, unless a later time for
filing the subscription agreement is set by the Board for all eligible
Employees with respect to such offering period. Once enrolled, the Employee
remains enrolled in each subsequent offering of the Plan at the designated
payroll deduction unless the Employee withdraws by providing the Company with a
written Notice of Withdrawal or files a new subscription agreement prior to the
applicable Offering Date changing the Employee's designated payroll deduction.
(b) Payroll deductions for a participant shall commence with
the first payroll following the Offering Date, or the first payroll following
the date of valid filing of the subscription agreement, whichever is later, and
shall end on the Exercise Date of the offering period to which such
authorization is applicable, unless sooner terminated by the participant as
provided in paragraph 10.
6. Payroll Deductions.
(a) At the time a participant files his subscription
agreement, he shall elect to have payroll deductions made on each payday during
all subsequent offering periods at a rate not exceeding ten percent (10%), or
such other rate as may be determined from time to time by the Board, of the
Compensation which he would otherwise receive on such payday, provided that the
aggregate of such payroll deductions during any offering period shall not
exceed ten percent (10%), or such other percentage as may be determined from
time to time by the Board, of the aggregate Compensation which he would
otherwise have received during said offering period.
(b) All payroll deductions authorized by a participant shall
be credited to his account under the Plan. A participant may not make any
additional payments into such account.
(c) A participant may discontinue his participation in the
Plan as provided in paragraph 10, or may decrease, or increase, the rate of his
payroll deductions during an offering period by completing and filing with the
Company a new authorization for payroll deduction. No more than two payroll
deduction changes will be allowed during an offering period. The change in
rate shall be effective fifteen (15) days following the Company's receipt of
the new authorization. A participant may decrease or increase the amount of
his payroll deductions as of the beginning of an offering period by completing
and filing with the Company, at least fifteen (15) days prior to the beginning
of such offering period, a new payroll deduction authorization.
(d) Notwithstanding the foregoing, to the extent necessary,
but only to such extent, to comply with Section 423(b)(8) of the Code and
paragraph 3(b) herein, a participant's payroll deductions may be decreased to
0% at such time during any offering period that the aggregate of all payroll
deductions accumulated with respect to such
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offering period equals (i) 85% of the maximum value of shares permitted to be
purchased by one person in any one calendar year by Section 423 (b)(8) of the
Code, multiplied by (ii) the portion of a year that the length of such
offering period represents. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
next succeeding offering period, unless terminated by the participant as
provided in paragraph 10.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provisions for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any
time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations including any withholding required to make
available to the Company any tax deductions or benefits attributable to the
sale or early disposition of Common Stock by the Employee.
7. Grant of Option.
(a) On each Offering Date, each participant shall be granted
an option to purchase (at the per share option price) up to the number of full
shares of the Company's Common Stock arrived at by dividing such participant's
total payroll deductions to be accumulated during such offering period by the
lower of (i) eighty-five percent (85%) of the fair market value of a share of
the Company's Common Stock at the Offering Date, or (ii) eighty-five percent
(85%) of the fair market value of a share of the Company's Common Stock at the
Exercise Date; provided that in no event shall an Employee be permitted to
purchase a number of shares greater than the "Maximum Cap" during such offering
period, and provided further that such purchase shall be subject to the
limitations set forth in Paragraphs 3(b) and 12 hereof. The "Maximum Cap" for
each offering period shall be the number of shares purchasable under this Plan
during that offering period with the maximum payroll deductions permitted by
paragraph 6 (d) hereof, based upon the fair market value of the Common Stock at
the beginning of such offering period. The fair market value of a share of the
Company's Common Stock shall be determined as provided in paragraph 7 (b)
herein.
(b) The option price per share of such shares shall be the
lower of : (i) eighty-five percent (85%) of the fair market value of a share of
the Common Stock of the Company at the Offering Date; or (ii) eighty-five
percent (85%) of the fair market value of a share of the Common Stock of the
Company at the Exercise Date. "Fair market value" shall mean, as of any date,
the value of the Company's Common Stock determined as Follows:
(1) If the Common Stock is listed on any established
stock exchange or national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its fair market value shall be the
closing sale price for the Common Stock (or the mean of the closing bid and
asked prices if no sales were reported), as quoted on such exchange (or the
exchange with the greatest volume of trading of Common Stock) or system on the
date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
(2) If the Common Stock is quoted on the NASDAQ
system (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or:
(3) In the absence of an established market for the
Common Stock, the fair market value thereof shall be determined in good faith
by the Board.
8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in paragraph 10, his option for the purchase of shares will be
exercised automatically at the Exercise Date, and the maximum number of full
shares subject to option will be purchased for him at the applicable option
price with the accumulated payroll deductions in his account. The shares
purchased upon exercise of an option hereunder shall be deemed to be
transferred to the participant on the Exercise Date. During his lifetime, a
participant's option to purchase shares hereunder is exercisable
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only by him. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
offering period, subject to earlier withdrawal by the participant as provided
in Section 10 hereof. Any other monies leftover in a participant's account
after the Exercise Date shall be returned to the participant.
9. Delivery. As promptly as practicable after the Exercise Date
of each offering period, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his option. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him of shares at the
Exercise Date of each offering period which merely represents a fractional
share shall be credited to the participant's account for the next subsequent
offering period; any additional cash shall be returned to said participant.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all, but not less than all,
the payroll deductions credited to his account under the Plan at any time
prior to the Exercise Date by giving written notice to the Company on a form
provided for such purpose. All of the participant's payroll deductions
credited to his account will be paid to him as soon as practicable after
receipt of his notice of withdrawal, and his option for the current offering
period will be automatically canceled, and no further payroll deductions for
the purchase of shares will be made during such offering period or subsequent
offering periods, except pursuant to a new subscription agreement filed in
accordance with paragraph 6 hereof.
(b) Upon termination of the participant's Continuous Status
as an Employee prior to the Exercise Date of an offering period for any reason,
including retirement or death, the payroll deductions accumulated in his
account will be returned to him as soon as practicable after such termination
or, in the case of his death, to the person or persons entitled thereto under
paragraph 14, and his option will be automatically canceled.
(c) In the event an Employee fails to remain in Continuous
Status as an Employee of the Company for at least twenty (20) hours per week
during an offering period in which the employee is a participant, he will be
deemed to have elected to withdraw from the Plan, and the payroll deductions
credited to his account will be returned to him and his option canceled.
(d) A participant's withdrawal from an offering will not
have any effect upon his eligibility to participate in a succeeding offering or
in any similar plan which may hereafter be adopted by the company.
11. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common
Stock which shall be reserved for sale under the Plan shall be 50,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in paragraph 18. If the total number of shares which would otherwise be
subject to options granted pursuant to paragraph 7 (a) hereof on the Offering
Date of an offering period exceeds the number of shares then available under
the Plan (after deduction of all shares for which options have been exercised
or are then outstanding), the Company shall make a pro rata allocation of the
shares remaining available for option grant in as uniform and equitable a
manner as is practicable. In such event, the Company shall give written notice
of such reduction of the number of shares subject to the option to each
participant affected thereby and shall return any excess funds accumulated in
each participant's account as soon as practicable after the Exercise Date of
such offering period.
(b) The participant will have no interest or voting rights
in shares covered by his option until such option has been exercised.
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(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his spouse.
13. Administration.
(a) The Plan shall be administered by the Board of Directors
of the Company or a committee (the "Committee") appointed by the Board. The
administration, interpretation or application of the Plan by the Board or the
Committee shall be final, conclusive and binding upon all participants.
Members of the Board or the Committee who are eligible employees are permitted
to participate in the Plan, provided that:
(i) Members of the Board who are eligible to
participate in the Plan may not vote on any matter affecting the administration
of the Plan or the grant of any option pursuant to the Plan.
(ii) If a Committee is established to administer
the Plan, no member of the Board who is eligible to participate in the Plan may
be a member of the Committee.
(b) Notwithstanding the provisions of Subsection (a) of this
Section 13, in the event that Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor
provision ("Rule 16b-3") provides specific requirements for the administrators
of plans of this type, the Plan shall be administered only by such a body and
in such a manner as shall comply with the applicable requirements of Rule
16b-3. Unless permitted by Rule 16b-3, no discretion concerning decisions
regarding the Plan shall be afforded to any committee or person that is not
"disinterested" as that term is used in Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant in the absence of a valid designation of a beneficiary who is
living at the time of such participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the estate of the
participant; or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives
of the participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may reasonably designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in paragraph 14 hereof) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with paragraph 10.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees as soon as practicable following the Exercise Date. Such statements
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will set forth the amounts of payroll deductions, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.
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18. Adjustments Upon Changes in Capitalization.
(a) Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each option under the
Plan which has not yet been exercised and the number of shares of Common Stock
which have been authorized for issuance under the Plan but have not yet been
placed under option (collectively, the "Reserves"), as well as the price per
share of Common Stock covered by each option under the Plan which has not yet
been exercised, shall be proportionately adjusted for any increase or decrease
in the number of issued share of Common Stock resulting from a stock split,
stock dividend, combination or reclassification of the Common Stock or any
other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration". Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue 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 option.
(b) In the event of the proposed dissolution or liquidation of
the Company, the offering period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
(c) In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, each option under the Plan shall be assumed or an
equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the offering period then in progress by
setting a new Exercise Date (the "New Exercise Date") or to cancel each
outstanding right to purchase and refund all sums collected from participants
during the offering period then in progress. If the Board shortens the
offering period then in progress in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify each participant in
writing, at least ten (10) business days prior to the New Exercise Date, that
the Exercise Date for his option has been changed to the New Exercise Date and
that his option will be exercised automatically on the New Exercise Date,
unless prior to such date he has withdrawn from the offering period as provided
in Section 10 hereof. For purposes of this paragraph, an option granted under
the Plan shall be deemed to be assumed if, following the sale of assets or
merger, the option confers the right to purchase, for each share of option
stock subject to the option immediately prior to the sale of assets or merger,
the consideration (whether stock, cash or other securities or property)
received in the sale of assets or merger by holders of Common Stock for each
share of Common Stock held on the effective date of the transaction (and if
such holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if such consideration received in the sale of assets or
merger was not solely common stock of the successor corporation or its parent
(as defined in Section 424 (e) of the Code), the Board may , with the consent
of the successor corporation, provide for the consideration to be received upon
exercise of the option to be solely common stock of the successor corporation
or its parent equal in fair market value to the per share consideration waved
by holders of Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the
event that the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its outstanding
Common Stock, and in the event of the Company being consolidated with or merged
into any other corporation.
19. Amendment or Termination.
(a) The Board may at any time and for any reason terminate or
amend the Plan. Except as provided in paragraph 18, no such termination will
affect options previously granted. Except as provided in paragraph 18, no
amendment may make any change in any option theretofore granted which adversely
affects the rights of any participant. In addition, to the extent necessary,
but only to such extent, to comply with Rule 16b-3 under the Exchange Act, or
with
7
<PAGE> 8
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain shareholder approval of
an amendment in such a manner and to such a degree as so required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the offering periods,
limit the frequency and/or number of changes in the amount withheld during an
offering period, permit payroll withholding in excess of the amount designated
by a participant in order to adjust for the delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that the amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the participant's
compensation, and establish such other limitations or procedures as the Board
(or its committee) determines in its sole discretion advisable which are
consistent with the Plan.
20. Notices. All notices or other communications by a participant
to the Company in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the stockholders of the Company within twelve months
before or after the date the Plan is adopted. Such shareholder approval shall
be obtained in the manner and degree required under the California General
Corporate Law.
22. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an option, if required by applicable
securities laws, the Company may require the participant for whose account the
option is being exercised to represent and warrant at the time of such exercise
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company as described in paragraph 21. It shall
continue in effect for a term of twenty (20) years unless sooner terminated
under paragraph 19.
8
<PAGE> 1
EXHIBIT 4.2
MUSTANG SOFTWARE, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in each offering of
the Mustang Software, Inc. Employee Stock Purchase Plan (the "Plan")
beginning subsequent to the date set forth below and subscribes to
purchase shares of Common Stock of Mustang Software, Inc. (the
"Company") in accordance with this Agreement and the Plan.
2. I hereby authorize payroll deductions from each paycheck during each
offering period in the amount of _____% of my compensation (including
base pay and, to the extent applicable, any amounts attributable to
overtime, shift premium, incentive compensation, bonuses and
commissions) in accordance with the Plan.
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares in accordance with the Plan, and that shares will
be purchased for me automatically at the end of each offering period
unless I withdraw from the Plan by giving written notice to the
Company. I authorize the Company to carry over in my account to the
next offering period any cash insufficient to purchase a share
of Common Stock.
4. I have received a copy of the Company's most recent prospectus which
describes the Plan and a copy of the complete "Mustang Software, Inc.
Employee Stock Purchase Plan". I understand that my participation in
the Plan is in all respects subject to the terms of the Plan.
5. Shares purchased for me under the Plan should be issued in the name(s)
of:
Address:__________________________________________________________
Social Security Number:___________________________________________
If you choose to include your spouse, you must designate below how you
wish your shares to be registered by checking the appropriate box. If
we receive no designation, the shares will be designated as joint
tenants.
[ ] Joint Tenants [ ] Community Property
[ ] Tenants in Common [ ] Tenants by Entirety
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Offering Date (the first day of
the offering period during which I purchased such shares) or within 1
year after the date on which such shares were transferred to me, I
will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal to
the excess of the fair market value of the shares at the time such
shares were transferred to me over the price which I paid for the
shares. I hereby agree to notify the
<PAGE> 2
Company in writing within 30 days after the date of any such
disposition. However, if I dispose of such shares at any time after the
expiration of the 2-year and 1-year holding periods, I understand that
I will be treated for federal income tax purposes as having received
income only at the time of such disposition, and that such income will
be taxed as ordinary income only to the extent of an amount equal to
the lesser of (1) the excess of the fair market value of the shares at
the time of such disposition over the purchase price which I paid for
the shares under the option, or (2) the excess of the fair market value
of the shares over the option price, measured as if the option had been
exercised on the Offering Date. The remainder of the gain, if any,
recognized on such disposition will be taxed as capital gains.
7. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Plan:
<TABLE>
<S> <C>
NAME: (Please Print) ___________________________________________________________________________
First Middle Last
- ------------ ---------------------------------------------------------------------------
Relationship
---------------------------------------------------------------------------
Address
NAME: (Please Print) ___________________________________________________________________________
First Middle Last
- ------------ ---------------------------------------------------------------------------
Relationship
---------------------------------------------------------------------------
Address
Date:________ _________________________________________
Signature of Employee
I do not wish to participate in the Employee Stock Purchase Plan.
Date:_________ _________________________________________
Signature of Employee
</TABLE>
<PAGE> 1
EXHIBIT 5
[LETTERHEAD]
June 28, 1996
Mustang Software
6200 Lake Ming Road
Bakersfield CA 93306
Re: Mustang Software, Inc.
Registration Statement on Form S-8
50,000 Shares issuable under Employee Stock Purchase Plan
Dear Sirs:
We are counsel to Mustang Software, Inc. a California (the "Company"). We have
assisted the Company in its preparation of a Registration Statement (the
"Registration Statement") on Form S-8 under the Securities Act of 1933, as
amended (the "Securities Act"), registering 50,000 shares of Common Stock, no
par value, of the Company (the "Common Stock ") issuable under the Company's
Employee Stock Purchase Plan (the "Plan").
In rendering this opinion, we have considered such questions of law and
examined such statutes and regulations, corporate records, certificates and
other documents and have made such other examinations, searches and
investigations as we have considered necessary. In such examination we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified or as photocopies or telecopies. We have
not made an independent examination of the laws of any jurisdiction other than
California and the Federal Law of the United States, and we do not express or
imply any opinions in respect to the laws of any other jurisdiction. The
opinions expressed herein are based on legislation and regulations in effect on
the date hereof.
Based on and subject to the foregoing we are of the opinion that the Common
Stock, when issued under the Plan and the purchase price therefor has been
paid pursuant to the provisions of the Plan, will be duly and validly issued,
fully paid and nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. This consent is not to be construed as an admission
that we are a person whose consent is required to be filed with the
Registration Statement under the provisions of the Securities Act.
Very truly yours,
/s/ FRESHMAN, MARANTZ, ORLANSKI,
COOPER & KLEIN
---------------------------------
FRESHMAN, MARANTZ, ORLANSKI,
COOPER & KLEIN
<PAGE> 1
EXHIBIT 24.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation into the Registration Statement on Form S-8 of Mustang Software,
Inc. relating to 50,000 shares of Common Stock issuable to participants
pursuant to the Mustang Software, Inc. Employee Stock Purchase Plan of our
report dated February 6, 1996 relating to the financial statements of Mustang
Software, Inc. which appears in its Annual Report on Form 10-KSB for the year
ended December 31, 1995.
Los Angeles, California
June 27, 1996
/s/ ARTHUR ANDERSEN L.L.P.
---------------------------
Arthur Andersen L.L.P.
