UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14A
INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934
Filed by
the Registrant
x
Filed by
a Party other than the Registrant
o
Check the
appropriate box:
x
Preliminary Proxy Statement
o
Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
o
Definitive Proxy Statement
o
Definitive
Additional Materials
o
Soliciting
Material Pursuant to §240.14a-11(c) or §240.14a-2
Avistar
Communications Corporation
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
No fee
required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies: Common Stock, par value $[______]
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(2)
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Aggregate
number of securities to which transaction applies: [________]
shares of Common Stock
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was
determined): $[____]
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(4)
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Proposed
maximum aggregate value of
transaction: $[________]
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(5)
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Total
fee paid: $[_____]
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o
Fee paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held June 10, 2010
TO THE
STOCKHOLDERS:
NOTICE IS
HEREBY GIVEN that the 2010 annual meeting of stockholders (“Annual Meeting”) of
Avistar Communications Corporation (the “Company” or “Avistar”), a Delaware
corporation, will be held on June 10, 2010 at 10:00 a.m. Pacific Daylight
Savings Time, at 1875 S. Grant Street, 10th Floor, San Mateo,
California 94402 for the following purposes:
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1.
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To
elect six (6) directors to serve until the next Annual Meeting or in each
case until his successor is duly elected and qualified (this matter only
concerns the election as directors of the individuals listed; no other
nominations or elections are before the Annual
Meeting);
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2.
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To
approve the amendment and restatement of the Company’s
bylaws;
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3.
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To
approve the 2010 Employee Stock Purchase
Plan;
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4.
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To
approve a stock option exchange program pursuant to which eligible holders
of stock options will be offered the opportunity to exchange their
eligible options to purchase shares of common stock outstanding under the
Company’s existing equity incentive plans, for a smaller number of new
options at a lower exercise price;
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5.
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To
ratify the appointment of Burr Pilger Mayer, Inc. as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2010; and
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6.
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To
transact such other business as may properly come before the Annual
Meeting including any motion to adjourn to a later date to permit further
solicitation of proxies, if necessary, or before any adjournment or
postponement thereof.
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The
foregoing items of business are more fully described in the proxy statement
accompanying this notice. Only stockholders of record at the close of
business on April 12, 2010 are entitled to attend and vote at the
meeting.
All
stockholders are cordially invited to attend the meeting in
person. You will receive a Notice of Internet Availability of Proxy
Materials (the “Notice”), unless you previously asked to receive our proxy
materials in paper form. However, to ensure your representation at
the Annual Meeting, please vote as soon as possible using the Internet or
telephone, as instructed in the Notice. Alternatively, you may follow
the procedures outlined in the Notice to request a paper proxy card to submit
your vote by mail.
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By:
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Elias
MurrayMetzger
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Chief Financial Officer, Chief
Administrative Officer and Corporate Secretary
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San Mateo, California
April 30,
2010
IN
ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING, IN
THE EVENT YOU ARE NOT PERSONALLY PRESENT, PLEASE SUBMIT YOUR PROXY
ELECTRONICALLY VIA THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS IN
THE NOTICE OR IF YOU ASKED TO RECEIVE THE PROXY MATERIALS IN PAPER FORM, PLEASE
COMPLETE, SIGN AND DATE THE PROXY CARD AND RETURN IT IN THE POSTAGE PAID
ENVELOPE PROVIDED.
Important
Notice Regarding The Proxy Materials for the Stockholder Meeting to be held
on
June
10, 2010: the Proxy Statement and Annual Report to Stockholders for the fiscal
year ended
December 31,
2009 are available electronically free of charge at http://proxyvote.com
.
AVISTAR
COMMUNICATIONS CORPORATION
PROXY
STATEMENT FOR 2010
ANNUAL
MEETING OF STOCKHOLDERS
INFORMATION
CONCERNING SOLICITATION AND VOTING
General
The
enclosed proxy is solicited on behalf of the board of directors of Avistar
Communications Corporation (the “Company”), for use at the 2010 annual meeting
of stockholders (the “Annual Meeting”) to be held Thursday, June 10, 2010
at 10:00 a.m. Pacific Daylight Savings Time, or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
notice of Annual Meeting. The Annual Meeting will be held at the
Company’s principal executive offices located at 1875 S. Grant Street,
10
th
Floor,
San Mateo, California 94402. The Company’s telephone number at this
location is (650) 525-3300.
These
proxy solicitation materials and the Company’s Annual Report on Form 10-K
for the year ended December 31, 2009, including financial statements, were
first furnished over the Internet and the Notice was first mailed on or about
April 30, 2010 to stockholders entitled to vote at the meeting.
Stockholders
may receive an additional copy of the Annual Report on Form 10-K for the year
ended December 31, 2009, or a copy of the exhibits to the Annual Report on
Form 10-K without charge by sending a written request to the Secretary of the
Company at our principal executive office located at 1875 S. Grant Street, 10th
Floor, San Mateo, California 94402.
Record
Date
Stockholders
of record at the close of business on April 12, 2010 (the “Record Date”) are
entitled to notice of and to vote at the meeting. The Company has one
series of common shares outstanding, designated Common Stock, $.001 par
value. On the Record Date, 39,022,344 shares of the Company’s Common
Stock were issued and outstanding and held of record by 70
stockholders. The Company is authorized to issue 10,000,000 shares of
Preferred Stock, although no such shares were issued or outstanding as of the
Record Date.
Internet
Availability
Pursuant
to the rules promulgated by the Securities and Exchange Commission (the “SEC”),
we have elected to provide access to our proxy materials over the
Internet. Accordingly, we will first mail, on or about April 30,
2010, the Notice to our stockholders of record and beneficial owners at the
close of business on April 12, 2010. On the date of mailing of
the Notice, all stockholders and beneficial owners will have the ability to
access all of the proxy materials on a website referred to in the
Notice. These proxy materials will be available free of
charge.
The
Notice will identify the website where the proxy materials will be made
available; the date, the time and location of our Annual Meeting; the matters to
be acted upon at the meeting and the board of directors’ recommendations with
regard to each matter; a toll-free telephone number, an e-mail address, and a
website where stockholders can request a paper or e-mail copy of the proxy
statement; our Annual Report on Form 10-K for the year ended December 31, 2009
and a form of proxy relating to our Annual Meeting and all of our future
stockholders’ meetings; information on how to access the form of proxy; and
information on how to obtain directions to attend the meeting and vote in
person.
Revocability
of Proxies
Any proxy
given pursuant to this solicitation may be revoked by the person giving it at
any time before its use by delivering to the Secretary of the Company a written
notice of revocation or a duly executed proxy bearing a later date, or by
submitting a new later dated proxy by telephone or over the Internet, or by
attending the meeting and voting in person. Attendance at the meeting
will not by itself revoke a previously granted proxy. Deliveries to
the Company should be addressed to Elias MurrayMetzger, Corporate Secretary,
1875 S. Grant Street, 10
th
Floor,
San Mateo, California 94402.
However,
please note that beneficial owners of shares held in street name may revoke
their proxy by timely submitting new voting instructions to their broker, bank
or other nominee or by obtaining a legal proxy from the broker, trustee or other
nominee that holds their shares giving the beneficial owners the right to vote
the shares, or by attending the Annual Meeting and voting in
person.
All
shares that have been properly voted without timely revocation will be voted at
the Annual Meeting.
Voting
Procedures
Each
share of Common Stock outstanding on the Record Date is entitled to one
vote. Every stockholder voting for the election of directors
(Proposal One) may cumulate such stockholder’s votes and give one candidate a
number of votes equal to the number of directors to be elected, multiplied by
the number of shares such stockholder is entitled to vote, or distribute such
stockholder’s votes on the same principle among as many candidates as the
stockholder may select, provided that votes cannot be cast for more than six
candidates. The candidates receiving the highest number of votes, up
to the number of directors to be elected, shall be
elected. Additional information on cumulative voting is located in
the section captioned “Election of Directors – Cumulative
Voting.” Cumulative voting applies only to the election of
directors. The proxy holders will cumulate all shares voted and will
distribute those shares in such a manner to effect the election of as many
nominees set forth in these proxy materials as possible. On all other
matters, each share of Common Stock has one vote.
Solicitation
of Proxies
This
solicitation of proxies is made by the Company, and all related costs will be
borne by the Company. The Company may reimburse brokerage firms and
other persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies
also may be solicited by certain of the Company’s directors, officers and other
employees, without additional compensation, personally or by other
means.
Quorum;
Abstentions; Broker Non-Votes
Votes
cast by proxy or in person at the Annual Meeting will be tabulated by the
inspector of elections (the “Inspector”) who shall be a representative of the
Company’s transfer agent. The Inspector will determine whether or not
a quorum is present. In general, Delaware law also provides that to
have a quorum a majority of shares entitled to vote must be present or
represented by proxy at the meeting. Except in certain specific
circumstances, the affirmative vote of a majority of shares present in person,
or represented by proxy if a quorum is present, is required under Delaware law
for approval of proposals presented to stockholders.
The
Inspector will treat shares that are voted “WITHHELD” or “ABSTAIN” as being
present and entitled to vote for purposes of determining the presence of a
quorum. Such shares will not be treated as votes in favor of
approving any matter submitted to the stockholders for a vote. When
proxies are properly dated, executed and returned, the shares represented by
such proxies will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. If no specific instructions are
given, the shares will be voted (i) for the election of the nominees for
the board of directors set forth herein; (ii) to approve the amendment and
restatement of the bylaws of the Company; (iii) to approve the 2010
Employee Stock Purchase Plan; (iv) to approve a stock option exchange
program; (v) to ratify the appointment of Burr Pilger Mayer, Inc. to serve
as the independent registered public accounting firm of the Company for the
fiscal year ending December 31, 2010; and (vi) at the discretion of
the proxy holders, upon such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Under the
rules that govern brokers who have record ownership of shares that are held in
street name for their clients, who are the beneficial owners of the shares,
brokers have discretion to vote these shares on routine matters but not on
non-routine matters. Thus, if a stockholder does not otherwise
instruct his or her broker, the broker may turn in a proxy card voting the
stockholder’s shares “FOR” routine matters, but expressly instructing that the
broker is not voting on non-routine matters. A broker non-vote occurs
when a broker expressly instructs on a proxy card that the broker is not voting
on a matter, whether routine or non-routine. Broker non-votes are
counted for the purpose of determining the presence or absence of a quorum, but
are not counted for determining the number of votes cast for or against a
proposal. Unless the stockholder has provided otherwise his or her
broker will have discretionary authority to vote his or her shares on the
ratification of auditors, which is considered a routine matter.
Unlike at
previous annual meetings brokers do not have discretionary authority to vote on
the election of directors, so it is very important that a stockholder instruct
his or her broker how to vote on these proposals.
Votes
Required for Each Proposal
To elect
our directors and approve the other proposals being considered at the Annual
Meeting, the voting requirements are as follows:
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Discretionary
Voting Permitted?
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Election
of Directors
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Plurality
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No
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Amendment
and Restatement of the Bylaws
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Majority
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No
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Approval
of 2010 Employee Stock Purchase Plan
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Majority
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No
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Approval
of the Stock Option Exchange Program
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Majority
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No
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Ratification
of Burr Pilger Mayer, Inc.
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Majority
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Yes
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“Discretionary
Voting Permitted” means that brokers will have discretionary voting authority
with respect to shares held in street name for their clients, even if the broker
does not receive voting instructions from their client.
“Majority”
means a majority of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote on the specified matter.
“Plurality”
means a plurality of the votes of the shares present in person or represented by
proxy and entitled to vote on the election of directors.
The vote
required and method of calculation for the proposals to be considered at the
Annual Meeting are as follows:
Proposal One – Election of
Directors
. If a quorum is present, the six director nominees
receiving the highest number of votes, in person or by proxy, will be elected as
directors. You may vote “FOR” all nominees, “WITHHOLD” for all
nominees or “WITHHOLD” for certain nominees by specifying the name(s) of such
nominees on your proxy card. A properly executed proxy marked
"withhold" with respect to the election of the directors will not be voted with
respect to the directors and will not affect the outcome of the election,
although it will be counted for purposes of determining whether there is a
quorum.
Proposal Two – Approval of the
Amended and Restated Bylaws
. Approval of the amended and
restated bylaws will require the affirmative vote of a majority of the shares
present, represented and entitled to vote. You may vote “FOR,”
“AGAINST” or “ABSTAIN” from voting on this proposal. If you abstain
from voting on this matter, your shares will be counted as present and entitled
to vote on the matter for purposes of establishing a quorum, and the abstention
will have the same effect as a vote against this proposal.
Proposal Three – Approval of 2010
Employee Stock Purchase Plan
. Approval of the 2010 Employee
Stock Purchase Plan will require the affirmative vote of a majority of the
shares present, represented and entitled to vote. You may vote “FOR,”
“AGAINST” or “ABSTAIN” from voting on this proposal. If you abstain
from voting on this matter, your shares will be counted as present and entitled
to vote on the matter for purposes of establishing a quorum, and the abstention
will have the same effect as a vote against this proposal.
Proposal Four
–
Approval of the Stock Option
Exchange Program
. Approval of the Stock Option Exchange
Program will require the affirmative vote of a majority of the shares present,
represented and entitled to vote. You may vote “FOR,” “AGAINST” or
“ABSTAIN” from voting on this proposal. If you abstain from voting on
this matter, your shares will be counted as present and entitled to vote on the
matter for purposes of establishing a quorum, and the abstention will have the
same effect as a vote against this proposal.
Proposal Five – Ratification of Burr
Pilger Mayer, Inc. as Independent Registered Public
Accountants
. Ratification of Burr Pilger Mayer, Inc. as
Avistar’s independent registered public accounting firm for the year ending
December 31, 2010 will require the affirmative vote of a majority of the
shares present at the Annual Meeting in person or by proxy. You may
vote “FOR,” “AGAINST” or “ABSTAIN” from voting on this proposal.
Deadline
for Receipt of Stockholder Proposals for the 2011 Annual Meeting
In order
to be considered for inclusion in the proxy statement and form of proxy relating
to the 2011 annual meeting of stockholders of the Company, proposals of
stockholders of the Company that are intended to be presented by such
stockholders at the Company’s 2011 annual meeting of stockholders must be
received by the Company no later than December 31, 2010 (which is 120 days
prior to the anniversary date of the mailing of this proxy
statement).
The SEC
rules establish a different deadline with respect to discretionary voting (the
“Discretionary Vote Deadline”) for stockholder proposals that are not intended
to be included in a company’s proxy statement. The Discretionary Vote
Deadline for our 2011 annual meeting of stockholders is March 16, 2011,
which is 45 days prior to the anniversary of the mailing date of this proxy
statement. If a stockholder fails to comply with the foregoing notice
provision, the proxy holders will be allowed to use their discretionary
authority when and if the proposal is raised at the Company’s 2011 annual
meeting of stockholders.
Section 2.2
of the Company’s bylaws provides that, for business to be properly brought
before an annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the secretary of the Company. To
be timely, a stockholder’s notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 30 days in
advance of the date specified in the Company’s proxy statement released to
stockholders in connection with the previous year’s annual meeting of
stockholders.
The
estimated mailing and access date for the Company’s proxy statement relating to
its 2011 Annual Meeting of stockholders is April 30, 2011 and therefore, for a
stockholder proposal to be timely for purposes of Section 2.2 of the bylaws
of the Company, it must be delivered to or mailed and received at the principal
executive offices of the Company no later than March 31, 2011. Since
the bylaw deadline occurs after the Discretionary Vote Deadline, a stockholder
proposal received after the Discretionary Vote Deadline but before the bylaw
deadline would be eligible to be presented at the 2011 annual meeting of
stockholders, but we believe that our proxy holders would be allowed to use the
discretionary authority granted by the proxy card to vote for or against the
proposal at the 2011 annual meeting of stockholders without including any
disclosure of the proposal in the proxy statement relating to such
meeting.
However,
if Proposal Two is approved by the stockholders at the Annual Meeting, then the
bylaws will be amended and restated to provide that:
Stockholders
may submit proposals, including director nominations, for consideration at
future stockholder meetings.
Requirements for stockholder
proposals to be considered for inclusion in the Company’s proxy
materials
—Stockholders may present proper proposals for inclusion in the
Company’s proxy statement and for consideration at the next annual meeting of
stockholders by submitting their proposals in writing to the Secretary of the
Company in a timely manner. In order to be included in the proxy
statement for the 2011 annual meeting of stockholders, stockholder proposals
must be received by the Secretary of the Company no later than December 31,
2010 and must otherwise comply with the requirements of Rule 14a-8 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Requirements for stockholder
proposals to be brought before an annual meeting
—In addition, the
Company’s bylaws establish an advance notice procedure for stockholders who wish
to present certain matters before an annual meeting of
stockholders. In general, nominations for the election of directors
may be made (1) by or at the direction of the board of directors, or (2) by any
stockholder entitled to vote who has timely delivered written notice to the
Secretary of the Company during the Notice Period (as defined below), which
notice must contain specified information concerning the nominees and concerning
the stockholder proposing such nominations. However, if a stockholder
wishes only to recommend a candidate for consideration by the Nominating
Committee as a potential nominee for director, see the procedures discussed in
"Nominating Committee —Requirements for stockholder recommendations of a
candidate to the board of directors."
The
Company bylaws also provide that the only business that may be conducted at an
annual meeting is business that is brought (1) pursuant to the notice of meeting
(or any supplement thereto), (2) by or at the direction of the board of
directors, or (3) by a stockholder who has timely delivered written notice which
sets forth all information required by our bylaws to our secretary during the
Notice Period (as defined below).
The
"Notice Period" is defined as the period commencing on the date 75 days prior to
the one year anniversary of the date on which we first mailed our proxy
materials to stockholders for the previous year's annual meeting of stockholders
and terminating on the date 45 days prior to the one year anniversary of the
date on which we first mailed our proxy materials to stockholders for the
previous year's annual meeting of stockholders. As a result, the Notice Period
for the 2011 annual meeting of stockholders will be from February 14, 2011
to March 16, 2011.
If a
stockholder who has notified us of his or her intention to present a proposal at
an annual meeting does not appear to present his or her proposal at such
meeting, we need not present the proposal for vote at such meeting.
The
foregoing deadlines assume that the Company’s 2011 annual meeting of
stockholders will be held within 30 days of the anniversary date of the
2010 Annual Meeting. If the Company elects to hold the 2011 annual
meeting of stockholders on a date that is more than 30 days before or after
June 10, 2011, the Company will include revised deadlines in an annual report on
Form 10-K or a quarterly report on Form 10-Q filed with the
SEC.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of April 12, 2010 as to
(i) each person or entity who is known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock; (ii) each director
or nominee to the board of directors of the Company; (iii) each of the
Named Executive Officers (as defined below under “Executive Compensation and
Other Matters — Executive Compensation — Summary Compensation Table”) and
(iv) all directors, nominees to the board of directors and executive
officers of the Company as a group. Except as otherwise noted, the
stockholders named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to applicable community property laws. Except as otherwise
noted, the address of each person listed on the table is c/o Avistar
Communications Corporation, 1875 S. Grant Street, 10
th
Floor,
San Mateo, California 94402.
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Common
Stock Beneficially Owned (1)
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Percentage
of Common Stock Beneficially Owned (1)
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Dr. Gerald
J. Burnett (2)
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16,447,512
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42.1
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%
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R. Stephen
Heinrichs (3)
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7,268,918
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18.6
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%
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Fuller
& Thaler Asset Management, Inc. (4)
411
Borel Avenue
Suite
300
San
Mateo, CA 94402
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3,431,400
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8.8
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%
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William L.
Campbell (5)
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2,103,931
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5.3
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%
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Dr. Robert M.
Metcalfe (6)
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381,028
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1.0
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%
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Craig F.
Heimark (7)
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514,030
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1.3
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%
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Robert F.
Kirk
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100,086
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*
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Elias A.
MurrayMetzger (8)
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258,220
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*
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Stephen
Epstein (9)
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237,949
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*
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Dr. J.
Chris Lauwers (10)
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1,161,163
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2.9
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%
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All
directors and current executive officers as a group 12 persons
(11)
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29,340,975
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68.6
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%
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(1)
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Applicable
percentage ownership is based on 39,022,344 shares of Common Stock
outstanding as of April 12, 2010, together with applicable options or
warrants for such stockholder. Beneficial ownership is
determined in accordance with the rules of the SEC, based on factors
including voting and investment power. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days after April 12, 2010 are deemed outstanding for
computing the percentage ownership of the person holding such options, but
are not deemed outstanding for computing the percentage of any other
person.
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(2)
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The
shares are held by Dr. Burnett as a co-trustee of a marital trust, as
to which he has sole voting and investing power. Also included
above are 32,812 shares of Common Stock that may be acquired upon exercise
of stock options exercisable within 60 days after April 12,
2010.
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(3)
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6,449,523
shares are held by Heinrichs Revocable Trust, of which Mr. Heinrichs
serves as a co-trustee and as to which he has sole voting and investing
power. 665,229 shares are held indirectly by Mr. Heinrichs
through Fairview Financial Corporation, over which Mr. Heinrichs has
sole voting and investment power. Also included above are
154,166 shares of Common Stock that may be acquired upon exercise of stock
options exercisable within 60 days after April 12,
2010.
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(4)
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Based
solely on Schedule 13G/A filing by Fuller & Thaler Asset
Management, Inc. (“FTAM”) as of May 4, 2009. The shares
reported above are held by FTAM as an investment
adviser.
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(5)
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The
shares are held by Mr. Campbell as co-trustee of a marital trust, as
to which he has sole voting and investing power. Also included
above are 1,012,812 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days after
April 12, 2010.
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(6)
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Dr. Metcalfe’s
shares include 317,228 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days after
April 12, 2010.
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(7)
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Mr. Heimark’s
shares include 148,228 shares of Common Stock that may be acquired upon
exercise of stock options within 60 days after April 12,
2010.
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(8)
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Mr. MurrayMetzger’s
shares include 183,308 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days after
April 12, 2010.
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(9)
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Mr. Epstein’s
shares include 237,949 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days after
April 12, 2010.
|
|
(10)
|
Dr. Lauwers’
shares include 818,138 shares of Common Stock that may be acquired upon
exercise of stock options exercisable within 60 days after
April 12, 2010.
|
|
(11)
|
Includes
3,772,779 shares of Common Stock that may be acquired upon exercise of
stock options exercisable within 60 days after April 12,
2010.
|
PROPOSAL
ONE
ELECTION
OF DIRECTORS
A board
of six directors is to be elected at the Annual Meeting. The nominees
for directors to be elected at the Annual Meeting are Gerald J. Burnett,
William L. Campbell, Robert F. Kirk, Craig F. Heimark,
R. Stephen Heinrichs, and Robert M. Metcalfe. These six
nominees were approved by the Nominating Committee of the board of
directors. If elected, each nominee will serve for an approximate
one-year term and until his successor is elected and qualified, or until his
earlier resignation or removal. Unless otherwise instructed, the
proxy holders will vote the proxies received by them for the Company’s nominees
named in this proxy statement, who are presently directors of the
Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present board of
directors to fill the vacancy. The Company is not aware that any
nominee will be unable or will decline to serve as a director. In the
event that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner as will
assure the election of as many of the nominees listed above as possible, and, in
such event, the specific nominee to be voted for will be determined by the proxy
holders.
Cumulative
Voting
Every
stockholder voting to elect a director may cumulate such stockholder’s votes and
give to one of the candidates to be elected a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which
such stockholder is entitled, or distribute the stockholder’s votes on the same
principle among as many candidates as the stockholder thinks fit, provided that
votes cannot be cast for more than the number of directors to be
elected. The proxy holders will, when voting for directors, cumulate
the votes represented by the proxies received. No stockholder shall
be entitled to cumulate votes for a candidate unless such candidate’s name has
been properly nominated prior to the voting.
Cumulative
voting will be in effect this year. As a result, the proxy holders
will cumulate all shares voted at their discretion and will distribute those
shares in such a manner to effect the election of as many of the directors
proposed in these proxy materials as possible.
Information
Concerning the Nominees and Incumbent Directors
The
following table sets forth the name and age of each director of the Company and
each nominee as of April 12, 2010, the principal occupation of each, and the
period, if any, during which each has served as a director of the
Company. Each nominee is currently a director of the Company and the
information below includes the experiences, qualifications, attributes or skills
that caused the Board of Directors to determine that the individual should
continue to serve as a director of the Company
.
|
|
|
|
|
|
Gerald J.
Burnett
|
Gerald
J. Burnett is one of the Company's founders and has been Chairman of the
Company's board of directors since March 2000. Dr. Burnett
served as the Company's Chief Executive Officer from March 2000 until
December 2007, and as Chief Executive Officer of Avistar Systems from
December 1998 until March of 2000. From 1993 to 1997, he was a
director of Avistar Systems or a principal of its predecessor limited
partnership. Until recently, he has been a member of the
Corporation (Board of Trustees) of the Massachusetts Institute of
Technology. Dr. Burnett holds a B.S. and an M.S. from the
Massachusetts Institute of Technology in electrical engineering and
computer science and a Ph.D. from Princeton University in computer science
and communications. Dr. Burnett, a Ph.D., has a wealth of
experience with the science underlying our technologies and is a named
inventor on some of the patents underlying our products. Dr. Burnett
has over 35 years of experience founding, managing and growing technology
firms. We believe his qualifications to serve on our Board include
his previous experience as our Chief Executive Officer.
|
67
|
1997
|
|
William L.
Campbell
|
William L. Campbell is one
of the Company’s founders and has been a member of the Company’s board of
directors since March 2000. Mr. Campbell served
as the Company’s Chief Operating Officer from January 2005 until June
2007. From September 2007 until December 2007,
Mr. Campbell held the position of Director of Strategic
Initiatives. He served as the Company’s Corporate Secretary
from June 2001 until December 2007, and served as its interim Chief
Financial Officer from April 2001 to May 2001. He served as
Chief Executive Officer of Collaboration Properties,
Inc. (CPI) a wholly-owned subsidiary of the Company from
December 1997 until it was merged into the parent corporation in October
2007. He was Chairman of Vicor, Inc. from 1994 until its sale
in 2005. Mr. Campbell holds a B.S. in general engineering
from the U.S. Military Academy and an M.S. in management from the Sloan
School of the Massachusetts Institute of Technology. Mr.
Campbell’s qualifications to serve on the Company’s board include his
substantial operational and management expertise, his experience as both a
director and chairman of the board of private companies, and his finance
skills. Mr. Campbell has successfully sold a number of technology
companies he co-founded including most recently, Vicor Inc. He has a
background in shareholder communications and investor relations as a
result of his previous role as the Company’s Corporate
Secretary.
|
62
|
1997
|
|
Craig F.
Heimark
|
Craig Heimark has served as a
member of the Company's board of directors since June 2005. He
has been the Managing Partner of the Hawthorne Group, a strategic advisory
firm focused on equity consulting to high growth information technology
and financial companies, since 1998. During 2000 and 2001, Mr.
Heimark provided consulting services to the Company. From 1990
to 1997, he served in various capacities at Swiss Bank Corporation
Warburg, the predecessor company to UBS Warburg. He is a member
of the board of directors of Austin Packaging Company and Deutsche
Borse. Mr. Heimark holds a B.A. degree in Economics and a B.S.
in Biology from Brown University
.
Mr. Heinmark’s qualifications to
serve on our Board include his business development and investment
expertise.
Mr.
Heinmark possesses the skills to provide in-depth financial analysis of
our business operations as well as potential investment
opportunities. Furthermore,
he is an experienced investor and
a venture capitalist, with extensive experience in finance, public company
corporate governance and executive compensation
matters.
|
55
|
2005
|
|
R. Stephen
Heinrichs
|
R.
Stephen Heinrichs is a founder of the Company and has served as a member
of the board of directors of the Company since March
2000. Until his retirement in April 2001, he was Chief
Financial Officer and Corporate Secretary of the Company and its
subsidiaries. Mr. Heinrichs served as a strategic advisor to
the Company from May 2001 to May 31, 2003. He is a member of the
board of directors and the chair of the Audit Committee of PDF Solutions,
a technology company. Mr. Heinrichs holds a B.S. in accounting
from California State University in Fresno. He is a Certified
Public Accountant. Mr. Heinrichs brings more than thirty years
of financial analysis and business planning from his experiences as a
Certified Public Accountant and Chief Financial Officer of several private
companies. Mr. Heinrichs is skilled in merger and acquisition
negotiation as well as the financial reporting requirements applicable to
public companies. As a result of being a co-founder and previous CFO
of the Company, he has a long history with and knowledge of the Company
and of the markets and communities in which the Company
operates.
|
63
|
1997
|
|
Robert F.
Kirk
|
The
board of directors of the Company appointed Mr. Robert Kirk as Chief
Executive Officer of the Company in July 2009 whereupon shortly thereafter
he was appointed to the board of directors. Mr. Kirk most
recently served as Chief Executive Officer of ChoicePay, Inc., a payment
services company, from August 2008 to its sale to Tier Technologies, Inc.
in January 2009. Mr. Kirk served as Chief Executive
Officer of Vicor, Inc., a provider of image-enabled receivables processing
and management solutions company, from August 2005 to its sale to
Metavante Corporation in September 2006. Prior to his
appointment as Chief Executive Officer of Vicor, Inc., in August 2005,
Mr. Kirk served continuously in various management positions at
Vicor, Inc. beginning in January 1999. Mr. Kirk holds a
Master’s and Bachelor’s degree in Business Administration from West
Virginia University. Mr. Kirk’s qualifications to serve on our
Board and as CEO of the Company include his extensive business development
and investment expertise and his experience in executive management for a
broad array of technology-based businesses. Mr. Kirk brings
extensive entrepreneurial experience developing and managing small and
medium size businesses. As such, he has hands on experience in marketing
and sales, the human resources function and strategic planning and
implementation.
|
54
|
2009
|
|
Robert M.
Metcalfe
|
Robert M.
Metcalfe has served as a member of the board of directors of the Company
since November 2000. Dr. Metcalfe has been a partner of
Polaris Venture Partners since January 2001. Dr. Metcalfe
served as Vice President of Technology for International Data Group
(“IDG”), a publisher of technology, consumer and general how-to books from
1993 to 2001, and served as a member of the board of directors of IDG from
1998 to 2006. Dr. Metcalfe founded 3Com Corporation, a
provider of networking products and solutions, in 1979, and served in
various capacities, including Chief Executive Officer and Chairman of the
Board, until 1990. Dr. Metcalfe is a member of the
Corporation (Board of Trustees) of the Massachusetts Institute of
Technology (“MIT”). Dr. Metcalfe also serves on the board
of directors of six privately held companies. Dr. Metcalfe
holds Bachelor degrees in electrical engineering and industrial management
from MIT, a M.S. degree in applied mathematics from Harvard University and
a Ph.D. in computer science from Harvard
University. Dr. Metcalfe is a recipient of the IEEE Medal
of Honor and is a member of the National Academy of
Engineering. He was awarded the National Medal of Technology by
President Bush in 2005, and was inducted into the National Inventors’ Hall
of Fame in 2007. Dr. Metcalfe’s extensive technology know-how,
in-depth background in network technologies, protocols and designs, in
addition to deep industry knowledge provide invaluable guidance to the
Company. Dr. Metcalfe’s experience as a member of a wide-range of
other public and private companies has given him a strong understanding of
corporate responsibility and corporate governance. With his experience
advising a broad array of technology-based businesses within our industry,
he contributes significant insight into product development, product
markets, and operational synergies affecting our business.
|
64
|
2000
|
Board
of Directors Meetings and Committees
The board
of directors of the Company held seven meetings during 2009 and acted by
unanimous written consent 3 times during 2009. Each director then in
office attended, either in person, by teleconference or by video conference, at
least 75% of the meetings held during the period he sat on the board of
directors. Each director attended, either in person, by
teleconference, or by video conference, at least 75% of the committee meetings
held during the period he sat on a committee of the board of directors, if
any.
Board
Independence
The board
of directors has determined that each of Messrs. Heimark and Heinrichs and
Dr. Metcalfe is “independent” as the term is defined by
Item 407(a)(1)(ii) of Regulation S-K under the Securities Act of 1933, as
amended (the “Securities Act”) as currently in effect. There are no
immediate family relationships between or among any of our executive officers or
directors.
Risk
Management
The board
of directors, as a whole and through its committees, has responsibility for the
oversight of risk management. With the oversight of the full board of
directors, the officers are responsible for the day-to-day management of the
material risks the Company faces. In its oversight role, the board of
directors has the responsibility to satisfy itself that the risk management
processes designed and implemented by management are adequate and functioning as
designed. The involvement of the full board of directors in setting
the Company’s business strategy at least annually is a key part of its oversight
of risk management, its assessment of management’s appetite for risk and its
determination of what constitutes an appropriate level of risk for the
Company. The full board of directors regularly receives updates from
management and outside advisors regarding certain risks we face, including
litigation and various operating risks.
In
addition, the board committees each oversee certain aspects of risk
management. For example, the audit committee is responsible for
overseeing risk management of financial matters, financial reporting, the
adequacy of our risk-related internal controls, internal investigations and
enterprise risks; the compensation committee oversees risks related to
compensation policies and practices; and the Nominating Committee oversees
governance related risks, such as board independence and conflicts of interest,
as well as management and director succession planning. The board
committees report their findings to the full board of directors.
Senior
management attend, as needed, board and board committee meetings and are
available to address any questions or concerns raised by the board on risk
management-related and any other matters. Annually, the board of
directors holds strategic planning sessions with senior management to discuss
strategies, key challenges, and risks and opportunities for the
Company.
Board
and Leadership Structure
We
currently separate the positions of Chief Executive Officer and Chairman of the
Board. Since March 2000, Dr. Burnett has served as the Chairman
of the board of directors. The responsibilities of the Chairman of
the Board include: setting the agenda for each board meeting in consultation
with the Chief Executive Officer; presiding at executive sessions; and
communicating the formal evaluations of the Chief Executive Officer in the
context of the annual compensation review to the Chief Executive
Officer.
Separating
the positions of Chief Executive Officer and Chairman of the Board allows the
Chief Executive Officer to focus on the Company’s day-to-day business, while
allowing the Chairman of the board to lead the board in its fundamental role of
providing advice to and independent oversight of management. The
board believes that having a separate director serve as chairman of the board is
the appropriate leadership structure for the Company at this time and
demonstrates the Company’s commitment to good corporate governance.
The board
delegates substantial responsibility to each board committee, which reports
their activities and actions back to the full board of directors. We
believe that the board committees and their chairs are an important aspect of
the Company’s board leadership structure.
Board
Committees
The board
has established four standing board committees: the Audit Committee, the
Compensation Committee, the Nominating Committee and the Stock Option
Committee. Until January 4, 2010, the members of each of these
committees were as identified below.
|
Audit
Committee
|
Compensation
Committee
|
Nominating
Committee
|
Stock
Option Committee
|
|
James
W. Zeigon, Chair
|
Craig
F. Heimark, Chair
|
Robert
M. Metcalfe, Chair
|
Gerald
J. Burnett
|
|
Craig
F. Heimark
|
R.
Stephen Heinrichs
|
William
L. Campbell
|
Robert
F. Kirk
|
|
Robert
M. Metcalfe
|
James
W. Zeigon
|
James
W. Zeigon
|
|
On January 4, 2010, Mr. James
Zeigon resigned from the board and various committees of the board.
Reconstitution
of Board Committees
At its April [__], 2010 meeting, the
board of directors reconstituted the committees of the board as follows,
effective as of June 10, 2010, subject to the election of the nominees named in
this proxy statement.
|
Audit
Committee
|
Compensation
Committee
|
Nominating
Committee
|
|
William
L. Campbell, Chair
|
Craig
F. Heimark, Chair
|
Robert
M. Metcalfe, Chair
|
|
Craig
F. Heimark
|
R.
Stephen Heinrichs
|
William
L. Campbell
|
|
|
|
|
Audit
Committee
Mr. Campbell
serves as the Chairman of the Audit Committee. The Company is no longer listed
on the NASDAQ Capital Market and the Audit Committee as constituted
does not satisfy the director independence requirements that apply to companies
listed on the NASDAQ Capital Market. The board of directors has
determined that Mr. Campbell and Mr. Heimark are "audit committee financial
experts" as defined by
Item 407(d)(5) of
Regulation S-K under the Securities Act.
This designation is a
disclosure requirement of the SEC and does not impose upon Mr. Campbell any
duties, obligations, or liabilities greater than that which would otherwise be
imposed by virtue of his membership on the board or the Audit Committee. In
addition, this designation does not affect the duties, obligations, or
liabilities of any other director or Audit Committee member. The board has
determined that each audit committee member has sufficient knowledge in reading
and understanding financial statements to serve on the audit committee.
The Audit
Committee oversees the accounting, financial reporting and audit processes;
makes determinations regarding the selection of independent auditors; reviews
the results and scope of audit and other services provided by the independent
auditors; reviews the accounting principles and auditing practices and
procedures to be used in preparing the Company’s financial statements; and
reviews the Company’s internal controls. The Audit Committee works
closely with management and the Company’s independent registered public
accounting firm. The Audit Committee also meets with the Company’s
independent registered public accounting firm in an executive session, without
the presence of management, on a quarterly basis following completion of their
quarterly reviews and annual audit, and prior to the Company’s earnings
announcements, to review the results of their work. The Audit
Committee also meets with the Company’s independent accountants annually to
approve the scope of the audit services to be performed. In light of
the Company’s delisting from the NASDAQ Capital Market, the Board approved an
amendment and restatement of the Audit Committee’s charter on April [__],
2010 to remove the NASDAQ Capital Market independence requirements from the
charter. The Audit Committee met four times during
2009. The Audit Committee’s Report for 2009 is included in this proxy
statement. A copy of the recently approved charter of the Audit
Committee is attached as Exhibit A to this Proxy Statement.
Compensation
Committee
Each of Stephen Heinrichs
and Craig Heimark
is independent within the meaning of NASDAQ Marketplace
Rules and SEC regulations.
Mr. Heimark
is currently the Chair of the Compensation Committee. The
Compensation Committee is responsible for reviewing salaries, incentives and
other forms of compensation for directors and executive officers, and for other
employees of the Company as requested by the board of directors. In
addition, the Compensation Committee reviews the various incentive compensation
and benefit plans of the Company. The Compensation Committee met five
times in 2009.
Nominating
Committee
The
Nominating Committee was formed to assist the board of directors in meeting
applicable governance standards by monitoring the composition of the board of
directors, and, when appropriate, seeking, screening and recommending for
nomination qualified candidates (i) for election to the Company’s board of
directors at the Company’s annual meetings and; (ii) to fill vacancies on
the Company’s board of directors. In light of the Company’s delisting
from NASDAQ, at its April [__], 2010 meeting the Board approved an amendment and
restatement of the Nominating Committee’s charter to remove the NASDAQ
independence requirements from the charter. A copy of the recently approved
charter of the Nominating Committee is attached as Exhibit B to this Proxy
Statement. The Nominating Committee met twice in 2009.
Requirements
for stockholder recommendations of a candidate to the Board
The
Nominating Committee will consider recommendations for candidates to the board
of directors from stockholders of the Company. A stockholder that
desires to recommend a candidate for consideration by the committee as a
potential candidate for director must direct the recommendation in writing to
the Company at its principal executive offices in San Mateo, California
(Attention: Elias MurrayMetzger, Corporate Secretary) and must include the
candidate's name, age, home and business contact information, principal
occupation or employment, the number of shares beneficially owned by the
candidate, information regarding any arrangements or understandings between the
candidate and the stockholder recommending the candidate or any other persons
relating to the recommendation, and any other information required to be
disclosed about the candidate if proxies were to be solicited to elect the
candidate as a director pursuant to Regulation 14 of the Exchange
Act. The Nominating Committee will consider the recommendation but
will not be obligated to take any further actions with respect to the
recommendation.
Requirements
for stockholder nominations to be brought before an annual meeting
If
Proposal Two is approved at the Annual Meeting, the amended and restated bylaws
will contain specific requirements governing the processes and procedures for
stockholders who wish to formally nominate a candidate and ensure that he or she
is nominated and eligible for election at an annual meeting of
stockholders. Generally, nominations for the election of directors
may be made by stockholders who have timely delivered written notice to the
Company at its principal executive offices in San Mateo, California (Attention:
Elias MurrayMetzger, Corporate Secretary) in compliance with the advance notice
provisions included in the amended and restated bylaws. Such notice
must contain specified information concerning the nominees such as the nominees'
name, age, home and business contact information, principal occupation or
employment, the class and number of shares beneficially owned by the nominee and
any derivative positions held or beneficially held by the nominee, whether any
hedging transactions have been entered into by the nominee or on his or her
behalf, information regarding any arrangements or understandings between the
nominee and the stockholder nominating the nominee or any other persons relating
to the nomination, a written statement by the nominee acknowledging that the
nominee will owe a fiduciary duty to the Company and the stockholders if
elected, and any other information required to be disclosed about the nominee if
proxies were to be solicited to elect the nominee as a director pursuant to
Regulation 14 of the Exchange Act. For a stockholder recommendation
to be considered by the Nominating Committee of a potential candidate at an
annual meeting, written notice of nominations must be received timely on or
before the deadline for receipt of stockholder proposals for such
meeting. In the event a stockholder decides to nominate a candidate
for director and solicits proxies for such candidate, the stockholder will need
to follow the rules set forth by the SEC and in the amended and restated
bylaws. See "Deadline for Receipt of Stockholder Proposals for the
2011 Annual Meeting".
Except as
may be required by rules promulgated by the SEC, it is the current position of
the committee that there are no specific qualifications that must be met by any
candidate for the board, nor are there specific qualities or skills that are
necessary for any candidate for the board to possess. These
procedures may be modified at any time as may be determined by the
committee.
In
evaluating the suitability of the candidates, the committee considers relevant
factors, including, among other things, issues of character, judgment,
independence, expertise, diversity of experience, length of service, other
commitments and the like. The committee considers the diversity of
the candidates and the board based on factors such as business background and
experience and potential contributions to the board.
The board
of directors has the final authority in determining the selection of director
candidates for nomination to the board.
Stock
Option Committee
The Stock
Option Committee was formed in April 2001 by resolution of the board of
directors of the Company, and currently consists of Dr. Burnett and
Mr. Kirk. The Stock Option Committee is not a formal or standing
committee of the board of directors.
The Stock
Option Committee is responsible for reviewing and approving stock option grants
under the Company’s 2000 Stock Option Plan to new employees (excluding executive
officers) and consultants, all in accordance with specific guidelines and
directions established by the Compensation Committee.
On a
regular basis, all actions of the Stock Option Committee are reported to the
Compensation Committee and to the board of directors. The Stock
Option Committee acted by written consent 4 times in 2009. Following
the Annual Meeting and subject to the election of the nominees named in this
proxy statement, the Stock Option Committee membership is expected to remain
unchanged.
Communication
with the Board of Directors
Stockholders
may communicate with the board of directors by submitting an email to
IR@avistar.com indicating ‘Board of Directors’ in the subject line, or by
writing to the Company at Avistar Communications Corporation,
Attention: Board of Directors, ℅ Corporate Secretary, 1875
S. Grant Street, 10
th
Floor,
San Mateo, California 94402. Stockholders who would like
their submission directed to a specific member of the board of directors may so
specify, and the communication will be forwarded.
Attendance
of the 2009 Annual Meeting of Stockholders
Although
the Company does not have a formal policy regarding attendance by members of the
board of directors at the Company’s annual meetings of stockholders, directors
are encouraged to attend annual meetings. Dr. Burnett and Mr.
Campbell attended the 2009 annual meeting of stockholders.
Code
of Ethics
The board
of directors has adopted a Business Conduct and Ethics Policy that is applicable
to all the Company’s employees, officers and directors and to certain of its
agents, contractors and consultants. A copy of the Business Conduct
and Ethics Policy is available at http://www.avistar.com/company. The
Company will report any amendments or waivers for the Business Code and Ethics
Policy for any of its officers or directors at
http://www.avistar.com/company.
Compensation
of Directors
The
Company’s employees do not receive any additional compensation for serving on
the board of directors or its committees. Non-employee directors
receive a per meeting fee of $2,500, if not waived by the
director. All of the Company’s directors may be reimbursed for
reasonable travel expenses incurred in attending board of directors
meetings. In 2009, each of the Company’s non-employee directors
elected to waive all of their meeting fees in cash for 2009 and instead received
an option grant to purchase 25,000 shares of the Company’s Common Stock at an
exercise price of $.88 per share under the Company’s 2000 Stock Option Plan,
with the same vesting, exercise, acceleration and other terms as the automatic
annual grants under the Company’s 2000 Director Option Plan (the “Director
Plan”).
The
Company’s Director Plan provides options to purchase Common Stock to
non-employee directors of the Company pursuant to an automatic non-discretionary
grant mechanism. The exercise price of the options is 100% of the
fair market value of the Common Stock on the grant date. The Director
Plan currently provides for an initial grant (the “Initial Grant”) to a
non-employee director of an option to purchase 50,000 shares of Common
Stock. Subsequent to the Initial Grant, each non-employee director is
granted an option to purchase 25,000 shares of Common Stock (the “Subsequent
Grant”) automatically on January 1 of each year, provided that the non-employee
director has served on the board of directors for at least the preceding six
months.
Each
director who is a member of the Audit Committee of the board of directors is
granted an additional option to purchase Common Stock (a “Subsequent Audit
Committee Option”) automatically on January 1 of each year, provided he or she
is then a member of the Audit Committee of the board of
directors. The Subsequent Audit Committee Option is for 10,000 shares
for the Chairman of the Audit Committee and 5,000 shares for each other member
of the Audit Committee.
The
Director Plan provides for the following:(i) options granted under the plan
shall continue to vest and be exercisable for so long as the option holder
remains a director or consultant to the Company, subject to the term of the
option; (ii) the time period for optionees to exercise options following
the date on which they are no longer a director or consultant to the Company
continues for a period of time that is determined by that service provider’s
length of service, and (iii) the board of directors has the authority to
make amendments to the Director Plan applicable to all options granted under the
Director Plan, including options granted prior to the effective date of the
amendment. The term of the options granted under the Director Plan is
ten years, but the exercise period of such options may be extended until the
second anniversary of a director’s termination depending on the director’s
length of service with the Company, or 12 months following the termination, if
such termination is due to death or disability. The Initial Grants
and the Subsequent Grants become exercisable at a rate of one-fourth of the
shares on the first anniversary of the grant date, and then 1/48 of the shares
during each subsequent month. In January 2009, Messrs. Campbell,
Heinrichs, Zeigon, and Dr. Burnett and Dr. Metcalfe were each granted
a Subsequent Grant to purchase 25,000 shares of the Company’s Common Stock at an
exercise price of $0.88 per share. Also in January 2009, in
consideration for service on the Audit Committee of the board of directors,
Mr. Heimark and Dr. Metcalfe were each granted a Subsequent Audit
Committee Option to purchase 5,000 shares at an exercise price of $0.88 per
share, and Mr. Zeigon, as Chairman of the Audit Committee, was granted an
option to purchase 10,000 shares of the Company’s Common Stock at $0.88 per
share.
The
Director Plan is set to expire as to new grants in April 2010. The
Company does not expect to renew or replace the Director Plan with a new equity
compensation plan for directors. Instead, it is expected that the
Board will make discretionary grants to directors pursuant to the Company’s 2009
Equity Incentive Plan in a manner consistent with past grants under the Director
Plan described above.
The
following table sets forth information concerning compensation paid or accrued
for services rendered to the Company in all capacities by the non-employee
directors for the fiscal year ended December 31, 2009.
DIRECTOR
COMPENSATION
|
|
|
Fees
Earned or Paid in Cash
($)(1)
|
|
|
|
|
|
|
|
|
Gerald
J. Burnett (1)
|
|
|
—
|
|
|
$
|
32,210
|
|
|
$
|
32,210
|
|
|
William
L. Campbell (1)
|
|
|
—
|
|
|
$
|
32,210
|
|
|
$
|
32,210
|
|
|
Craig
F. Heimark (1)
|
|
|
—
|
|
|
$
|
35,431
|
|
|
$
|
35,431
|
|
|
R. Stephen
Heinrichs (1)
|
|
|
—
|
|
|
$
|
32,210
|
|
|
$
|
32,210
|
|
|
Robert
M. Metcalfe (1)
|
|
|
—
|
|
|
$
|
35,431
|
|
|
$
|
35,431
|
|
|
James
W. Zeigon (1)
|
|
|
—
|
|
|
$
|
38,652
|
|
|
$
|
38,652
|
|
|
(1)
|
All
of the Company’s non-employee directors elected to waive all of their
meeting fees in cash in 2009 and instead they each elected to receive an
option grant to purchase 25,000 shares of the Company’s Common Stock at an
exercise price of $0.88. The aggregate grant date fair value of
these options was included in the “Option Awards” column. Mr.
Zeigon stepped down from the board effective January 4,
2010.
|
|
(2)
|
Amounts
do not reflect compensation actually received by the
director. Instead the amounts included under the “Option
Awards” column represent the aggregate grant date fair value of option
awards granted during the fiscal year ended December 31, 2009,
computed in accordance with Financial Accounting Standards Codification
Topic, 718. See “Equity Compensation on Non-employee
Directors,” above for a full description of these awards. For a
discussion of the valuation assumptions, see Note 7 to our
consolidated financial statements included in our annual Report on
Form 10-K for the year ended December 31,
2009.
|
Vote
Required; Recommendation of Board of Directors
If a
quorum is present and voting, the nominees receiving the highest number of votes
will be elected to the board of directors. Abstentions and broker
non-votes are not counted in the election of directors.
The
Company’s board of directors unanimously approved the nomination of each of the
individuals listed above and recommends that the stockholders vote “FOR” the
elections of these nominees.
PROPOSAL
TWO
AMENDMENT
AND RESTATEMENT OF AVISTAR COMMUNICATIONS CORPORATION BYLAWS
At the
Annual Meeting, the stockholders will be asked to approve the amendment and
restatement of the bylaws in order to (i) revise the procedures relating to
advance notice of stockholders’ director nominations and proposals, (ii)
decrease the size of the board of directors, (iii) change in the notice
requirements for special meetings of the board of directors and (iv) certain
other miscellaneous amendments described in further detail below (the “Bylaw
Amendments”). On April [__], 2010, the board of directors adopted the
Bylaw Amendments, subject to stockholder approval.
Reason
for and Effect of Bylaw Amendments
The board
recently reviewed the bylaws to ensure that the provisions of the bylaws include
up-to-date and clearly stated processes and procedures for corporate governance
matters and to determine whether any changes were necessary in light of recent
developments in Delaware law. Following its review, the board of
directors approved certain changes to the bylaws. The text of the
proposed Bylaw Amendments as approved by the board of directors, marked with
deletions indicated by strike-outs and additions indicated by underlining, is
attached to this proxy statement as
Appendix A
.
The
following is a summary of the material changes that will be effected by the
Bylaw Amendments if adopted and the board of directors’ reasoning for approving
such changes. The following description is qualified in its entirety
by reference to the actual text as set forth in
Appendix A
.
Clarification
of Advance Notice Requirements
Section 2.4
of the Bylaw Amendments clarifies the advance notice requirements for business
that may be conducted at a stockholders’ meeting to require that a stockholder
may only nominate directors or present proposals before a meeting if such
nomination or proposal was made in compliance with the advance notice procedures
of the bylaws. The board of directors believes that detailed and
clearly stated advance notice requirements are beneficial to both the
stockholders and to the board of directors in planning for and administering
meetings of the stockholders. In addition, they help the stockholders
to better understand the process that must be followed in order to comply with
the applicable provisions of the bylaws when submitting proposals for a
stockholder meeting, and they enable the board of directors to better plan for
such meetings and inform stockholders, if necessary or desirable, prior to the
meeting of the business to be conducted. We believe increased clarity
and specificity of these procedures will help to set the stockholders’
expectations for such meetings and better prepare the stockholders for such
meetings.
Stockholders
should be aware that the advance notice provisions of the Bylaw Amendments will
require any stockholder who desires to bring business before a meeting or
nominate a director to provide additional, more detailed information than is
required in the current bylaws and will preclude the conduct of business at a
particular meeting if the advance notice procedures are not followed
correctly. As a result, a stockholder nomination or proposal that is
not made in compliance with the Bylaw Amendments could be delayed to a
subsequent meeting.
In order
to ensure that the advance notice requirements in the bylaws are clear and
sufficiently detailed to result in the desired benefits of such requirements,
the board of directors approved a number of revisions to the advance notice
requirements including the following: (i) changing the deadlines to
explicitly require more reasonable advance notice of stockholder business and
director nominations, (ii) a specific description of what information will
be requested from stockholders and their proposed nominees for the board of
directors and how the appropriate information to be requested will be
determined, and (iii) the requirement to disclose a stockholders’ material
interests in proposed business or nominations and such stockholders’ derivative
positions or hedging transactions with respect to the Company’s
securities.
Clarify
Timelines Related to the Submission of All Proposals
The Bylaw
Amendments clarify that the advance notice provisions apply to all proposals of
business or nomination. More specifically, the Bylaw Amendments will,
among other things:
|
·
|
change
the deadline for stockholder proposals for annual meetings to a range of
forty-five (45) to seventy-five (75) days (as opposed to the current
deadline of thirty (30) to one hundred twenty (120) days) prior to the
one-year anniversary mailing date of the previous year’s proxy materials
(or notice of availability of proxy materials, as set forth in
Section 2.4(a)(i) of the Bylaw
Amendments;
|
|
·
|
change
the deadline for stockholder proposals for annual meetings when no annual
meeting was held in the previous year or when the date of the annual
meeting is advanced by more than thirty (30) days prior to or delayed by
more than sixty (60) days after the one-year anniversary of the date of
the previous year’s annual meeting to a range of (i) the later of
ninety (90) days prior to such annual meeting or the tenth (10th) day
following the day on which a public announcement of the date of such
annual meeting is first made to (ii) one hundred twenty (120) days
prior to the date of such annual meeting (as opposed to the current
provision requiring notice to be received a reasonable time before the
solicitation is made), as set forth in Section 2.4(a)(i) of the Bylaw
Amendments; and
|
|
·
|
set
the deadline for stockholder nominations of directors for special meetings
to the later of (i) the ninetieth (90th) day prior to such special
meeting or (ii) the tenth (10th) day following the day on which a
public announcement of the date of such special meeting is first made, as
set forth in Section 2.4(c)(i) of the Bylaw
Amendments.
|
Specific
Description of Information that will be Requested from Potential Director
Nominees and How the Appropriate Information to be Requested will be
Determined
Under the
bylaws, when a stockholder submits a proposal of business or a nomination for
election to the board of directors, such stockholder is required to provide
certain information about such stockholder, the proposed business, and the
background and experience of the nominee in order to determine, among other
things, such stockholder’s material interest in such proposed business and
whether such nominee is qualified to serve as a member of the board of
directors. Section 2.4(b) of the Bylaw Amendments clarify that
in addition to this information, we may also request additional information from
the proposed director nominee for the purpose of determining their
“independence” within the applicable meaning of the rules and regulations of the
SEC, any national securities exchange upon which the corporation’s securities
are listed, and any other applicable laws or regulations, including applicable
tax laws or regulations.
Disclosure
of Material Interests and Derivative Positions or Hedging
Transactions
The
requirement to disclose derivative positions and other forms of indirect
ownership of the securities included in Sections 2.4(a)(ii) and
2.4(b)(ii)(1) of the Bylaw Amendments will enable other stockholders and the
board of directors to better understand the potential motivation of a
stockholder in submitting a proposal or nomination, which will allow the
stockholders to make a more fully informed voting decision and assist the board
of directors in making a recommendation or statement of its
position. More specifically, Sections 2.4(a)(ii) and
2.4(b)(ii)(1) of the Bylaw Amendments will require that any stockholder
nominating a director or proposing business will also disclose the stockholder’s
and the stockholder’s affiliates’ material interests in such proposed business
and such stockholder’s, the stockholder’s affiliate’s and the stockholder
nominees’ derivative positions or hedging transactions with respect to the
Company’s securities.
The
current bylaws do not require disclosure of the information described in the
paragraph above. Therefore, approval of the Bylaw Amendments by the
stockholders will result in a greater disclosure burden on any stockholder
nominating a director or proposing business for a meeting.
Decrease
the Size of the Board of Directors
The
current bylaws provide that the current number of authorized directors is
seven. Section 3.2 of the Bylaw Amendment decreases the number
of authorized directors from seven to six. The board of directors
believes that six directors can adequately serve on the board of directors and
properly oversee the management of the Company.
Because
the proposed change to Section 3.2 in the Bylaw Amendments only affects the
board’s ability to act, it will not have any effect on any existing right of the
stockholders.
Change
in Special Meetings of Board of Directors Notice Requirements
The
current bylaws provide that the notice of special meetings of the board of
directors, if delivered personally or by telephone or telegram, shall be
delivered at least forty-eight (48) hours before the time of the holding of the
meeting. Section 3.8 of the Bylaw Amendment adds facsimile and electronic mail
to, and removes telegram from, the list of special meeting notice delivery
options. Additionally, Section 3.8 of the Bylaw Amendment provides that if the
notice is (i) delivered personally by hand, by courier or by telephone, (ii)
sent by facsimile or (iii) sent by electronic mail, it shall be delivered or
sent at least twenty-four (24) hours before the time of the holding of the
meeting. We believe that the proposed change will enable the use of
currently preferred methods of business communication with reduced delivery
times.
Because
the proposed change to Section 3.8 in the Bylaw Amendments only affects the
board’s ability to act, it will not have any effect on any existing right of the
stockholders.
Other
Miscellaneous Amendments
Section
2.1 of the Bylaw Amendments provides that the Company will have the option of
holding stockholder meetings by means of remote communication. Section 2.3 of
the Bylaw Amendments provides that in addition to those already authorized to do
so, a majority of the total number of authorized directors, whether or not there
are any vacancies on the board, can call a special meeting of
stockholders.
Section
2.5 of the Bylaw Amendments provides that in the absence of a quorum, the
chairman of the meeting of stockholders may adjourn the meeting. The
meeting need not be adjourned only by the majority vote of the stockholders
present or by proxy;
Section
2.11 of the Bylaw Amendments provides for transmissions of proxies as allowed by
law.
Section
3.10 of the Bylaw Amendments provides that directors can waive notice of board
meetings by electronic transmission.
Section
3.13 of the Bylaw Amendments provides for electronic transmission of consents by
members of the board and the committees, in addition to written
consents.
Section
3.16 of the bylaws was deleted in compliance with the Sarbanes-Oxley Act of 2002
which prohibits personal loans to executive officers.
Section
9.2 of the Bylaw Amendments provides for electronic transmission by the Company
of notices to stockholders.
These
miscellaneous amendments including without limitation the deletion of the
section related to loans for executive officers are recommended as good
corporate practice and will not have any effect on any existing right of the
stockholders.
Vote
Required; Recommendation of Board of Directors
The
approval of the Amended and Restated Bylaws require the affirmative vote of a
majority of the voters cast on the proposal at the Annual Meeting.
The
board of directors unanimously recommends a vote “FOR” the approval of the
amendment and restatement of the Company’s Bylaws.
PROPOSAL
THREE
APPROVAL
OF THE AVISTAR COMMUNICATIONS CORPORATION
2010
EMPLOYEE STOCK PURCHASE PLAN
The
stockholders of the Company are being asked to approve a new 2010 Employee Stock
Purchase Plan (the “2010 ESPP”). The board of directors of the
Company has adopted the 2010 ESPP, subject to stockholder approval at the 2010
annual meeting of stockholders. The Company currently sponsors the
Company 2000 Employee Stock Purchase Plan, as amended August 1, 2006 (the
“Existing ESPP”), which is due to expire in April 2010. If
stockholders do not approve the 2010 ESPP, the Company will not have an employee
stock purchase plan after the expiration of the Existing ESPP. The
board of directors has determined that it is in the best interests of the
Company and its stockholders to have an employee stock purchase plan and is
asking the Company’s stockholders to approve the 2010 ESPP.
Summary
of the 2010 ESPP
The
following is a summary of the principal features of the 2010 ESPP and its
operation. The summary is qualified in its entirety by reference to
the 2010 ESPP as set forth in
Appendix B
.
General
The 2010
ESPP was adopted by the board of directors during its April [__], 2010 meeting,
subject to approval by the stockholders at the 2010 annual meeting of
stockholders. The purpose of the 2010 ESPP is to provide a means by
which employees of the Company and its designated subsidiaries may be given an
opportunity to purchase common stock of the Company.
Shares
Available for Issuance
If the
stockholders approve this proposal, a total of 1,148,660 shares of the Company’s
common stock will be reserved for issuance under the 2010 ESPP. We expect that
the number of shares reserved for issuance under the 2010 ESPP will last for
approximately 9 years.
Administration
The 2010
ESPP will be administered by the board of directors or a committee of the board
of directors (in either case, the “Administrator”). The Administrator
has full and exclusive discretionary authority to construe, interpret and apply
the terms of the 2010 ESPP, to designate separate offerings under the 2010 ESPP,
to determine eligibility, to adjudicate all disputed claims filed under the 2010
ESPP and to establish such procedures it deems necessary for the administration
of the 2010 ESPP. Subject to the provisions of the 2010 ESPP, every
finding, decision, and determination made by the Administrator will, to the full
extent permitted by law, be final and binding upon all parties.
Eligibility
Unless
the Administrator provides otherwise (consistent with the terms of the 2010 ESPP
and/or Section 423 of the Internal Revenue Code of 1986, as amended
(the “Code”)), employees of the Company and its designated subsidiaries whose
customary employment is at least 20 hours per week and more than 5 months in a
calendar year are eligible to participate in the 2010 ESPP; except that no
employee will be granted an option under the 2010 ESPP (i) to the extent
that, immediately after the grant, such employee would own 5% or more of the
total combined voting power of all classes of the Company’s capital stock or the
capital stock of any Company parent or subsidiary, or (ii) to the extent
that his or her rights to purchase stock under all of the Company’s employee
stock purchase plans accrues at a rate which exceeds $25,000 worth of stock
(determined at the fair market value of the shares at the time such option is
granted) for each calendar year in which such rights are outstanding at any
time, as determined in accordance with Code Section 423 and the regulations
thereunder. Subject to the limits in the previous sentence, the
maximum aggregate number of shares available that a participant may purchase
under an offering period will be 25,000 shares.
Offerings
The 2010
ESPP is implemented by offerings of rights to eligible
employees. Each offering will be in such form and will contain such
terms and conditions as the Administrator will deem appropriate, which generally
will comply with Code Section 423(b) and all employees granted rights under an
offering will have the same rights and privileges. The provisions of
separate offerings need not be identical. Initially, the 2010 ESPP
has a series of consecutive 6-month offering periods commencing generally on
February 1 and August 1 of each year; however, the Administrator can modify the
duration of the offering period. The first day of an offering is
referred to as the “enrollment date.”
An
eligible employee may become a participant in the 2010 ESPP by delivering a
subscription agreement to the Company’s stock administration office (or its
designee), on or before a date determined by the Administrator prior to the
enrollment date or by following an electronic or other enrollment procedure
determined by the Administrator. A subscription agreement will
authorize participant contributions, generally in the form of payroll deductions
unless otherwise determined by the Administrator, which may not exceed 15% of a
participant’s compensation (as defined in the 2010 ESPP) during the
offering. Generally during an offering, a participant may increase or
decrease the rate of his or her participation level, except that the
Administrator may in its discretion limit the nature and/or number of rate
changes that can be made in any offering period.
On the
enrollment date, each participant is granted a right to purchase
shares. The right expires at the end of the offering, or potentially
earlier in connection with an employee’s termination (described below), but is
exercised on generally the last day on which the Company’s common stock is
actively traded during the offering period (the “exercise date”).
Purchase
Price
Unless
and until the Administrator determines otherwise, the purchase price for shares
is 85% of the fair market value of a share of Company common stock on the
enrollment date or on the exercise date, whichever date has a lower
price.
Payment
of Purchase Price; Contributions
On each
exercise date, each participant’s accumulated payroll deductions (or other
contributions) will be applied to the purchase of whole shares of Company common
stock, up to the maximum number of Shares permitted under the 2010 ESPP and a
given offering period. Currently, a participant may make
contributions under the 2010 ESPP only by payroll deductions, unless the
Administrator, in its sole discretion, permits participants to contribute
amounts through cash, check or other specified means set forth in the
subscription agreement prior to each exercise date.
Withdrawal
Generally,
a participant may withdraw from an offering by delivering a withdrawal notice to
the Company’s stock administration office or its designee in such form as the
Company provides or following an electronic or other procedure determined by the
Administrator. The participant will receive his or her accumulated
contributions from the offering promptly after the effective date of his or her
withdrawal. Once a participant withdraws from a particular offering,
the participant must re-enroll in the 2010 ESPP in order to participate in
future offerings under the 2010 ESPP.
Termination
of Employment
Rights
granted under the 2010 ESPP terminate immediately upon cessation of a
participant’s employment with the Company and any designated subsidiary of the
Company for any reason. Once a participant’s employment is
terminated, the Company will distribute to such terminated employee all of his
or her accumulated contributions under the offering generally without
interest.
Adjustments
upon Changes in Capitalization, Dissolution or Liquidation, or Change in
Control
Changes in
Capitalization
. In the event that any dividend or other
distribution (whether in the form of cash, common stock, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of common stock or other securities of the Company, or
other change in the corporate structure of the Company affecting the common
stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the 2010 ESPP, then the Administrator will adjust the number and class of
common stock that may be delivered under the 2010 ESPP, the purchase price per
share and the number of shares of common stock covered by each option under the
2010 ESPP that has not yet been exercised, and the maximum number of shares a
participant can purchase during an offering period.
Dissolution or
Liquidation
. In the event of our proposed dissolution or
liquidation, the offering period then in progress will be shortened by setting a
new exercise date and will terminate immediately prior to the completion of the
dissolution or liquidation, unless provided otherwise by the
Administrator. The new exercise date will be prior to the dissolution
or liquidation. If the Administrator shortens any offering periods
then in progress, the Administrator will notify each participant in writing or
electronically prior to the new exercise date, that the exercise date has been
changed to the new exercise date and that the right will be exercised
automatically on the new exercise date, unless the participant has already
withdrawn from the offering.
Merger or Change of
Control
. In the event of a merger or Change in Control (as
defined in the 2010 ESPP), then the surviving corporation or its parent or
subsidiary may assume outstanding rights under the 2010 ESPP or substitute
similar rights. If no surviving corporation assumes outstanding
rights or substitutes similar rights, the Administrator will shorten the
offering with respect to which such right relates by setting a new exercise date
on which such offering will end. The new exercise date will be prior
to the transaction. If the Administrator shortens any offering
periods then in progress, the Administrator will notify each participant in
writing or electronically prior to the date of the merger or Change in Control,
that the exercise date has been changed to the new exercise date and that the
right will be exercised automatically on the new exercise date, unless the
participant has already withdrawn from the offering.
Amendment
and Termination of the 2010 ESPP
The
Administrator may, at any time and for any reason, amend, suspend or terminate
the 2010 ESPP or any part of the 2010 ESPP. If the 2010 ESPP is
terminated, the Administrator may elect to terminate all outstanding offering
periods either immediately or upon completion of the purchase of shares on the
next exercise date (which may be sooner than originally scheduled, if determined
by the Administrator), or may elect to permit offering periods to expire in
accordance with their terms (and subject to any adjustments described
above). If an offering period is terminated prior to expiration, all
amounts credited to a participant’s account that were not used to purchase
shares will be returned to the participant (without interest) as soon as
administratively practicable. Without stockholder consent and without
limiting the foregoing, the Administrator is entitled to change the offering
periods, designate separate offerings, limit the frequency and/or number of
changes in the amount withheld during an offering period, establish the exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars,
permit payroll withholding in excess of the amount designated by a participant
in order to adjust for delays or mistakes in the Company’s processing of
properly completed withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of shares for each participant correspond
with contribution amounts, and establish such other limitations or procedures as
the Administrator determines in its sole discretion advisable which are
consistent with the 2010 ESPP. If the Administrator determines that
the ongoing operation of the 2010 ESPP may result in unfavorable financial
accounting consequences, the Administrator may modify, amend or terminate the
2010 ESPP to reduce or eliminate such accounting consequence.
Term
The 2010
ESPP became effective as of its adoption by the Board, subject to approval by
stockholders at the 2010 annual meeting of stockholders. The 2010
ESPP will continue for a term of 10 years, unless terminated sooner by the
Board as described in the paragraph above.
Participation
in Plan Benefits
Participation
in the 2010 ESPP is voluntary and is dependent on each eligible employee’s
election to participate and his or her determination as to the level of payroll
deductions or other contributions. Accordingly, future purchases
under the 2010 ESPP are not determinable. Non-employee directors are
not eligible to participate in the 2010 ESPP. As of April 12, 2010,
no purchases have been made under the 2010 ESPP since its adoption by the
Board. For illustrative purposes, the following table sets forth
(i) the number of shares that were purchased during fiscal year 2009 under
the Existing ESPP, and (ii) the weighted average price per share paid for
such shares.
Name
of Individual or Group
|
|
Number
of Shares Purchased
|
|
|
Weighted
Average Per Share Purchase Price ($)
|
|
|
All
executive officers, as a group
|
|
|
0
|
|
|
|
—
|
|
|
All
directors who are not executive officers, as a group
|
|
|
0
|
|
|
|
—
|
|
|
All
employees who are not executive officers, as a group
|
|
|
41,182
|
|
|
$
|
0.76
|
|
Certain
U.S. Federal Income Tax Information
The
following brief summary of the effect of U.S. federal income taxation upon the
participant and the Company with respect to the shares purchased under the 2010
ESPP does not purport to be complete, and does not discuss the tax consequences
of a participant’s death or the income tax laws of any state or non-U.S.
jurisdiction in which the participant may reside.
The 2010
ESPP, and the right of participants to make purchases thereunder, is intended to
qualify under the provisions of Sections 421 and 423 of the
Code. Under these provisions, no income will be taxable to a
participant until the shares purchased under the 2010 ESPP are sold or otherwise
disposed of. Upon sale or other disposition of the shares, the
participant generally will be subject to tax in an amount that depends upon the
holding period. If the shares are sold or otherwise disposed of more
than 2 years from the first day of the applicable offering and 1 year
from the applicable date of purchase, the participant will recognize ordinary
income measured as the lesser of (a) the excess of the fair market value of
the shares at the time of such sale or disposition over the purchase price, or
(b) the excess of the fair market value of a share on the enrollment date
that the right was granted over the purchase price for the right. Any
additional gain will be treated as long-term capital gain. If the
shares are sold or otherwise disposed of before the expiration of these holding
periods, the participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date the shares are
purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on how long the shares have been held from the date of
purchase. The Company generally is not entitled to a deduction for
amounts taxed as ordinary income or capital gain to a participant except to the
extent of ordinary income recognized by participants upon a sale or disposition
of shares prior to the expiration of the holding periods described
above.
Vote
Required; Recommendation of Board of Directors
The
approval of the 2010 ESPP requires the affirmative vote of a majority of the
votes cast on the proposal at the Annual Meeting.
The
board of directors unanimously recommends that stockholders vote “FOR” the
approval of the Avistar Communications Corporation 2010 Employee Stock Purchase
Plan.
PROPOSAL
FOUR
APPROVAL
OF A STOCK OPTION EXCHANGE PROGRAM FOR EMPLOYEES AND DIRECTORS
The board
of directors of the Company has determined that it would be in the best
interests of the Company and our stockholders to implement a one-time stock
option exchange program, as described in detail below, subject to stockholder
approval. The option exchange program would permit eligible service
providers, including our employees and executive officers and non-employee
directors (but specifically excluding our consultants), to exchange their
outstanding options issued under our 2000 Stock Option Plan, as amended (the
“
2000
Plan
”) and our 2000 Director Stock Option Plan, as amended (the “
Director
Plan
”) that were granted after June 16, 2000 with an exercise price of
$0.68 or higher for a lesser number of new options to be granted under our 2009
Equity Incentive Plan (the “
2009
Plan
”). The new options would have an exercise price equal to
the closing sales price of our common stock as quoted by the over-the-counter
market, on the date of the new grant, or “fair market value.”
The Board
believes the option exchange program would (1) enhance long-term
stockholder value by improving our ability to incentivize and retain our
employees and directors, (2) reduce the Company’s equity award “overhang”
(that is, the number of shares subject to outstanding equity awards relative to
the total number of shares of our common stock outstanding) through the
cancellation of outstanding options that currently provide no meaningful
retention or incentive value to our employees and directors, (3)
potentially provide for an increase in the shares available for future
grant under our equity compensation plans without creating additional dilution
to stockholders, and (4) help align eligible employee and director
incentives with stockholder interests given our current restructuring
efforts.
Stockholder
approval is not required for the option exchange program under either the 2000
Plan or the rules of the over-the-counter market. However, we believe
it is a better corporate governance practice and one which more aligns with our
pay practices, for the Company to seek stockholder approval before initiating
this one-time stock option exchange. If we were to consider future
option programs, we anticipate that we would seek stockholder approval for any
future option exchange or similar program before implementing it.
Required
Vote
We must
receive an affirmative vote of a majority of the total number of shares present
in person or represented by proxy and entitled to vote on the proposal at the
Annual Meeting in order for this proposal to be approved.
Reasons
for the Option Exchange Program
Equity
awards have been, and continue to be, a key part of our incentive compensation
and retention programs and are designed to motivate and reward the efforts of
our employees and directors. If approved by our stockholders, the
option exchange program would be open to all employees, including our executive
officers, and non-employee directors that provide service to the Company or its
subsidiaries as of the start of the exchange program and remain our service
providers through the date the option exchange program ends. For
purposes of the option exchange program, we refer to the employees and
non-employee directors described above as “eligible individuals” or “eligible
service providers.” We believe that to retain qualified individuals,
we need to maintain competitive compensation and incentive
programs.
Like many
other companies in the video communications industry, and in the broader
technology industry as a whole, the Company’s stock price has experienced
significant volatility and decline over the past years. As a result,
many of our eligible service providers hold options with exercise prices
significantly higher than the current market price of our common
stock. Specifically, the weighted average exercise price of options
held by our eligible employees and directors was $1.41 per share as compared to
a $0.50 closing price on April 12, 2010 for our common
stock. Consequently, as of April 12, 2010, approximately 96.7% of the
outstanding options held by our eligible service providers were priced above the
current market price. As such, these options may not be sufficiently
effective to retain and motivate these individuals to enhance long-term
stockholder value, yet the Company continues to recognize significant
compensation expense for accounting purposes with respect to these underwater
options. The Company believes an option exchange program can link
long-term incentives of our employees and directors with the desired increase in
stockholder value.
When
considering how best to retain and provide incentives to our eligible service
providers holding options that are priced above the current market price, we
considered several alternatives, including increasing cash compensation and/or
granting additional equity awards. Increasing cash compensation would
substantially increase our compensation expenses and reduce our cash flow from
operations. Granting additional options or other types of equity
awards at current market prices could substantially increase our overhang and
cause potential dilution to our stockholders.
We then
considered an option exchange program. We determined that a program
under which eligible service providers could exchange options that are priced
above the current market price for a lesser number of options with an exercise
price equal to the current fair market value of the shares covered by the
options was most attractive for a number of reasons, including the
following:
|
·
|
Reasonable, Balanced
Incentives
. As described in more detail below, under the
program participating eligible service providers would surrender fully or
partially-vested options that are priced substantially above the current
market price of our common stock for a lesser number of unvested options
that would have an exercise price equal to the then current fair market
value of the Company’s common stock. We believe the grant of a
lesser number of options with an exercise price that reflects a more
current stock price that vests over time is a reasonable and a balanced
exchange for underwater options and would have a much stronger current
impact on retention than do underwater
options.
|
|
·
|
Restore Retention
Incentives
. We rely on skilled and educated employees
and directors. Competition for these employees and directors is
significant. We continue to believe that equity awards are an
important component of the total compensation of our employees and
directors. Replacing this component with additional cash
compensation in order to remain competitive in the hiring marketplace may
have a material adverse effect on the Company. We also believe
that substantially underwater options do not have sufficient impact on
employee and director motivation and retention (and in fact, may have the
reverse impact), and that for our stock options to serve their intended
purposes, they need to be exercisable at least near the current price of
our common stock. The failure to address the underwater option
issue in the near to medium term may make it more difficult for us to
retain our key employees and directors. If we cannot retain
these employees and directors, our business, results of operations and
future stock price could be adversely
affected.
|
|
·
|
Overhang
Reduction
. Not only do underwater options have little or
no retention value, they cannot be removed from our pool of awarded equity
options until they are exercised, expire or otherwise terminate (for
example, when an employee leaves our employment). The option
exchange program would reduce the number of options currently granted and
utilized under our equity award plans because participating eligible
service providers would receive new options covering a lesser number of
shares than the number of shares covered by the surrendered
options. If all eligible options are exchanged, options to
purchase approximately 9,241,242 shares would be surrendered and
cancelled, while new options covering approximately 6,349,060 shares would
be issued, resulting in a net reduction in the number of options granted
under our equity award plans by approximately 2,892,182 shares, or
approximately 7.4% of the number of shares of our common stock outstanding
as of April 12, 2010.
|
|
·
|
Increase in Shares Available
for Grant under our 2009 Plan
. The option exchange
program would also provide for additional shares to be available for
future grant under our 2009 Plan without increasing the existing number of
shares reserved under the plan. The 2000 Plan provides that
shares subject to options under such plan that expire without being
exercised are added to the share reserve of the 2009 Plan. The
eligible options issued under the Director Plan that are cancelled in this
option exchange program will only be again available for grant under the
Director Plan (and will not become available under the 2009
Plan). However, the Director Plan will expire in April 2010,
and as such, all of the shares remaining available for grant under the
Director Plan will be cancelled and will not become reavailable for grant
under any of the Company's equity compensation plans. We
considered requesting stockholders to simply approve a share reserve
increase for our 2009 Plan, but given the other benefits that the exchange
offer provided, we determined this approach to be the best alternative to
align participating eligible service provider interests with our
stockholders and to also retrieve shares from such cancelled options which
would be available for future grants under our 2009 Plan. If
all eligible options are exchanged, the resulting number of shares which
would become available again for grant under our 2009 Plan would be
approximately 2,892,182 shares, or approximately 7.4% of the
number of shares of our common stock outstanding as of April 12, 2010 and
approximately 396,250 shares, or approximately 1.0% of the number of
shares of our common stock outstanding as of April 12, 2010, would lapse
under the Director Plan and not become otherwise available for future
grants.
|
Description
of the Option Exchange Program
Eligible
Service Providers
If
approved by our stockholders, the option exchange program would be open to all
of our US and UK based employees, including our executive officers, and our
non-employee directors that provide services to the Company or its subsidiaries
as of the start of the exchange program and remain our service providers through
the date the option exchange program ends. Collectively, our
executive officers hold eligible options for the purchase of 3,933,658 shares of
our common stock out of the total 9,241,242 shares of our common stock that are
subject to existing options which are anticipated to be eligible for surrender
in the option exchange program.
Participation
in the program would be voluntary. As of April 12, 2010, there were
approximately 49 employees and 5 non-employee directors that would be eligible
service providers (provided that they remain service providers through the date
the option exchange program ends). Our Board of Directors would,
however, have the authority to exclude certain individuals after taking into
account our administrative needs, accounting rules, or Company policy decisions
that make it appropriate to change eligibility.
Eligible
Options
The only
options that eligible service providers may exchange in the option exchange
program are those outstanding options granted after June 16, 2000 with an
exercise price of $0.68 or higher. In addition, if, on the expiration
of the tender offer, the exercise price of an option is equal to or less than
the closing price of our common stock on the expiration date, the option will
not be eligible for exchange.
If an
eligible service provider has more than one eligible option grant, then he or
she may pick and choose which eligible option grant(s) to
exchange. But if the eligible service provider elects to exchange an
individual eligible option grant, the entire option grant must be
tendered.
As of
April 12, 2010, eligible service providers held eligible options to purchase
approximately 11,060,018 shares of our common stock, with a weighted average
exercise price of $1.41 per share and a weighted average remaining term of 5.01
years.
Exchange
Ratio
The
option exchange program is not a one-for-one exchange. Eligible
service providers surrendering outstanding options would receive new options
covering a lesser number of shares than are covered by the surrendered
options. The number of shares underlying an eligible option that is
surrendered in the exchange in order to receive one share underlying the new
option is referred to as the “exchange ratio.” The proposed exchange
ratio for a surrendered option would depend on the original exercise price of
the surrendered option, with the result rounded down to the nearest whole
number.
Shown in
the table below are the exchange ratios that we intend to use in the option
exchange program based upon assumptions and various calculations, described in
more detail below, performed on April 12, 2010, using data available as of April
12, 2010:
If
the Exercise Price of an Eligible Option is:
|
The
Exchange
Ratio
is: (Expressed as Options Surrendered-for-Options Received)
|
|
$0.68
– 0.85, then
|
5-for-4
|
|
$0.86,
then
|
2-for-1
|
|
$0.87
– 1.20, then
|
5-for-4
|
|
$1.21
– 2.00, then
|
10-for-7
|
|
$2.01
– 2.91, then
|
100-for-65
|
|
$2.92
– 8.50
|
10-for-1
|
For
example, if an eligible service provider surrenders an eligible option to
purchase 5,000 shares with an exercise price of $1.00 per share, that eligible
service provider would receive a new option to purchase 4,000 shares (that is,
5,000 shares divided by 5/4, with the result rounded down to the nearest whole
number, equals 4,000 shares).
The
exchange ratios shown in the table above were designed to result in the issuance
of new options with a fair value for financial accounting purposes approximately
equal to the fair value of the options surrendered in the
exchange. We calculated the fair value of the eligible options using
the Black-Scholes-Merton option valuation model. For this purpose, we
used the following factors:
|
|
(i)
|
original
exercise price,
|
|
|
(ii)
|
assumed
value of $0.50 per share of our common stock (the closing price as of
April 12, 2010),
|
|
|
(iii)
|
expected
volatility of our common stock of
158%,
|
|
|
(iv)
|
expected
remaining terms of the eligible options as of the anticipated option
exchange date in June 2010,
|
|
|
(v)
|
average
risk-free rates of 1.7%, and
|
|
|
(vi)
|
no
expected dividends.
|
We then
established the exchange ratios set forth above based on the average
Black-Scholes-Merton value of the eligible options having exercise prices within
a specified range for each ratio, as compared to the Black-Scholes-Merton value
of one share of our common stock underlying an option to be issued in the option
exchange program.
The
following table summarizes information regarding the options eligible for
exchange in the program, as of April 12, 2010:
Exercise Price of Eligible Options
|
Number
of
Shares
Underlying
Eligible
Options
|
Weighted
Average
Price
of
Eligible
Options
($)
|
Weighted
Average
Remaining
Term
of
Eligible
Options
(Years)
|
|
Maximum
Number
of New Options
That
May be
Granted
Upon
Surrender
of
Eligible
Options
|
|
Greater
than or equal to $0.68 per share, but less than $0.86 per
share
|
1,633,500
|
0.80
|
8.66
|
5:4
|
1,306,800
|
|
Equal
to $0.86 per share
|
1,408,775
|
0.86
|
0.87
|
2:1
|
704,388
|
|
Greater
than or equal to $0.87 per share, but less than or equal to $1.20 per
share
|
2,494,304
|
0.98
|
5.92
|
5:4
|
1,995,443
|
|
Greater
than or equal to $1.21 per share, but less than or equal to $2.00 per
share
|
2,231,063
|
1.42
|
4.94
|
10:7
|
1,561,744
|
|
Greater
than or equal to $2.01 per share, but less than or equal to $2.91 per
share
|
1,151,500
|
2.64
|
4.28
|
100:65
|
748,475
|
|
Greater
than or equal to $2.92 per share, but less than or equal to $8.50 per
share
|
322,100
|
8.07
|
0.29
|
10:1
|
32,210
|
|
Total
|
9,241,242
|
1.49
|
5.00
|
100:69
|
6,349,060
|
If the
market price of our common stock prior to the commencement of the option
exchange program has increased or decreased such that the exchange ratios set
forth above would no longer result in the issuance of new options with an
aggregate fair value for financial accounting purposes approximately equal to
the aggregate fair value of the options eligible for exchange, our Board of
Directors will have the discretion to adjust the exchange ratios
accordingly.
Term
and Vesting Schedule
The
vesting schedule and maximum term of the new options will no longer be the same
as that which applied to the eligible options prior to participation in the
exchange program. The new options will be subject to a new vesting
schedule and have a new maximum term of 10 years from the date of
grant. None of the new options will be vested on the date of
grant. Instead, the new options will vest over a period of 2 or 3
years (as described in the table below), subject to acceleration upon a “change
in control” (as defined in the 2009 Plan). The new vesting schedule
of the new options will be as follows:
Vesting
Remaining on Eligible Option
|
Vesting
Schedule for New Option
|
|
Fully
vested eligible option
|
The
newly granted option will vest as to 50% of the shares on the first
anniversary of the grant date, and as to 50% of the shares on the 2-year
anniversary of the grant date, subject to continued service through each
vesting date; provided, however, that the granted option fully vests and
is exercisable as to 100% of the shares upon a change in
control.
|
|
Less
than 2 years of vesting remaining for full vesting of the eligible
option
|
The
newly granted option will vest as to 50% of the shares on the first
anniversary of the grant date, and as to 50% of the shares on the 2-year
anniversary of the grant date, subject to continued service through each
vesting date; provided, however, that the granted option fully vests and
is exercisable as to 100% of the shares upon a change in
control.
|
|
2
years or more vesting remaining for full vesting of the eligible
option
|
The
newly granted option will vest as to 34% of the shares on the first
anniversary of the grant date, and as to 33% of the shares on each of the
next yearly anniversaries of the grant date, so as to be fully vested in 3
years, subject to continued service through each vesting date; provided,
however, that the granted option fully vests and is exercisable as to 100%
of the shares upon a change in
control.
|
Implementing
the Option Exchange Program
We have
not commenced the option exchange program and will not do so unless our
stockholders approve this proposal. If the Company receives
stockholder approval of the program, the program may commence at a time
determined by the Company, with terms expected to be materially similar to those
described in this proposal. However, even if the stockholders approve
the program, the Board may still later determine not to implement the
program. It is currently anticipated that the program will commence
on [May 18, 2010] and expire on [June 15, 2010], with an exchange date of [June
15, 2010], same as the expiration date, subject to approval of the program by
our stockholders.
Upon the
commencement of the option exchange program, eligible service providers holding
eligible options would receive written materials explaining the precise terms
and timing of the program (an “offer to exchange”). Eligible service
providers would be given at least 20 business days to elect to exchange some or
all of their eligible options. Eligible employees would make this
election by filling out an election form which would be distributed to them as
part of the offer to exchange and submitting the form to the Company's
designated representative within the 20 business day period (or such longer
period as we choose to keep the offer open). After the offer to
exchange is closed, all eligible options that were surrendered for exchange
would be cancelled, and our Board of Directors would approve the grants of the
new replacement options in accordance with the applicable exchange
ratio. All new options would be granted under the 2009
Plan. All new options granted pursuant to the option exchange program
will retain the status as the eligible option it replaces to the extent
permissible under the law (e.g., if an eligible option was intended to be a
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “
Code
”),
then the new option will be an incentive stock option to the extent permissible
under the law).
At or
before commencement of the option exchange program, we would file the offer to
exchange with the Securities and Exchange Commission (the “
SEC
”) as
part of the tender offer statement on Schedule TO. Employees, as
well as stockholders and members of the public, would be able to obtain the
offer to exchange and other documents we file with the SEC free of charge from
the SEC’s website at www.sec.gov.
U.S.
Federal Income Tax Consequences
The
following is a summary of the anticipated material United States federal income
tax consequences of participating in the option exchange program. A
more detailed summary of the applicable tax considerations to participants will
be provided in the offer to exchange. The tax consequences of the
program are not entirely certain, however, and the Internal Revenue Service is
not precluded from adopting a contrary position, and the law and regulations
themselves are subject to change. All holders of eligible options are
urged to consult their own tax advisors regarding the tax treatment of
participating in the program under all applicable laws prior to participating in
the program. We believe the exchange of eligible options for new
options pursuant to the program should be treated as a non-taxable exchange and
neither we nor any of our eligible employees should recognize any income for
U.S. federal income tax purposes upon the surrender of eligible options and the
grant of new options. If the option exchange program is open for 30
days or more, eligible options that were intended to be incentive stock options
will be considered “modified,” which will result in a deemed regrant of the
eligible option, whether or not they were exchanged. This would mean
that for purposes of the incentive stock option rules the holding period
measured from the date of grant would restart and the option holder would not
receive any credit for the time from the original grant date of the eligible
option. The option exchange program is currently scheduled to remain
open for 29 calendar days and therefore should not result in a modification of
eligible incentive stock options. However, the Company may extend the
offer.
Potential
Modification to Terms of Option Exchange Program to Comply with Governmental
Requirements
The terms
of the option exchange program will be described in an offer to exchange that
will be filed with the SEC. Although we do not anticipate that the
SEC would require us to materially modify the program’s terms, it is possible
that we may need to alter the terms of the program to comply with comments from
the SEC. In addition, we may find it necessary or appropriate to
change the terms of the exchange program to take into account our administrative
needs, accounting rules, company policy decisions that make it appropriate to
change the exchange program and the like. Our Board of Directors will
thus retain the discretion to make any such necessary or desirable changes to
the terms of the program for purposes of complying with comments from the SEC or
addressing the factors described in the preceding sentence.
Potential
Modification to Terms of Option Exchange Program Due to Changing
Circumstances
Our Board
of Directors is authorized to adjust the threshold for options eligible to
participate in the option exchange program if there is a significant change in
the market price for our common stock preceding the commencement of the program
to ensure the intent of the program is realized; however, any changes would
preserve the general terms and eligibility requirements of the program discussed
in this proposal. Our Board of Directors will retain the discretion
to adjust the exchange ratios if there is a significant change in the market
price of our common stock preceding the commencement of the program in
comparison to the market price used in determining the exchange ratios set forth
in the table in this proposal. If our Board of Directors does adjust
the exchange ratios, it will do so with the intent of causing the offer to
exchange to result in the issuance of new options having a fair value
approximating the fair value of the stock options surrendered, determined using
the same valuation methodologies as were used to determine the exchange ratios
set forth in this proposal.
Financial
Accounting Consequences
The
Company accounts for stock-based compensation in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718,
Stock Compensation
(“
ASC
718
”). Under ASC 718, to the extent the fair value of each
award of stock options granted pursuant to the option exchange program exceeds
the fair value of the surrendered options at the modification date, such excess
is considered incremental compensation. This excess, in addition to
any remaining unrecognized expense for the eligible options surrendered in
exchange for the new options, will be recognized by the Company as an expense
for compensation. This expense will be recognized ratably over the
vesting period of the new options in accordance with the requirements of ASC
718. In the event that any awards of new options are forfeited prior
to their vesting due to termination of an employee’s or director's service, the
compensation cost related to the forfeited stock options will not be
recognized.
Program
Participation
Because
the decision whether to participate in the option exchange program is completely
voluntary, we are not able to predict who or how many eligible employees will
elect to participate, how many stock options would be surrendered for exchange
or the number of new options that may be issued.
Effect
on Stockholders
We are
unable to predict the precise impact of the option exchange program on our
stockholders because we are unable to predict how many or which eligible
employees may exchange their eligible options. The program was
designed in the aggregate to be substantially value neutral to our stockholders
and to reduce the dilution in ownership from outstanding equity
awards. The following table summarizes the effect of the program,
assuming all eligible options were exchanged, as of April 12, 2010:
|
|
|
|
|
Shares
of Common Stock Outstanding
|
39,022,344
|
39,022,344
|
|
Shares
Covered by All Outstanding Options (including options held by all
employees, executive officers and directors)
|
11,060,018
with a weighted average exercise price of $1.41 and a weighted average
remaining term of 5.01 years
|
8,167,836
with a weighted average exercise price of $0.62 (assuming an exercise
price of $0.50 for the new options granted in the exchange) and a weighted
average remaining term of 8.9 years
|
|
Shares
Covered by All Outstanding Full Value Awards (that is, outstanding
restricted stock units and unvested restricted stock
awards)
|
1,680,000
|
1,680,000
|
|
Shares
Available for Future Award Grants Under the 2009 Plan
|
860,273
|
3,752,455
|
If
you are both a stockholder and an employee holding eligible options, please note
that voting to approve the option exchange program does not constitute an
election to participate in the program.
Vote
Required; Recommendation of Board of Directors
The
Approval of the Option Exchange Program requires the affirmative vote of a
majority of the votes cast on the proposal at the Annual Meeting.
The board of directors unanimously
recommends a vote “FOR” the approval of the option exchange
program
.
PROPOSAL
FIVE
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee has selected Burr Pilger Mayer, Inc., or BPM, as the Company’s
independent registered public accounting firm to audit the consolidated
financial statements of the Company for the fiscal year ending December 31,
2010, and recommends that stockholders vote for ratification of such
appointment. Before making its selection, the Audit Committee
carefully considered the firm’s qualifications as independent
auditors. This included a review of the qualifications of the
engagement team, the quality control procedures the firm has established, and
any issues raised by the most recent quality control review of the firm; as well
as its reputation for integrity and competence in the fields of accounting and
auditing. The Audit Committee’s review also included matters required
to be considered under the SEC’s rules on auditor independence, including the
nature and extent of non-audit services provided by BPM, to ensure that they
will not impair the independence of the accountants. The Audit
Committee expressed its satisfaction with BPM in all of these
respects. Representatives of BPM are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate
questions.
Audit
Fees
For
fiscal 2009, BPM billed the Company $201,283 in fees and expenses for the audit
of its annual financial statements included in its annual report on Form 10-K,
and review of the Company’s unaudited interim quarterly financial statements
included in its quarterly reports on Form 10-Q. Additionally, BPM
billed the Company $6,486 for its review of the 2009 annual Proxy Statement and
2009 Equity Incentive Plan registration statement.
For
fiscal 2008, BPM billed the Company $199,669 in fees and expenses for the audit
of its annual financial statements included in its annual report on Form 10-K,
and review of the Company’s unaudited interim quarterly financial statements
included in its quarterly reports on Form 10-Q.
Non-audit
Related Fees
BPM did
not bill the Company for non-audit related fees in fiscal 2008 or
2009.
Tax
Fees and All Other Fees
BPM did
not provide, and the Company did not pay, BPM for any tax or other professional
services to the Company in fiscal 2008 or 2009. The Company did not
engage BPM to provide advice regarding financial information systems design and
implementation during fiscal 2009 or 2008.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Accountants
The Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent accountants subject to limited
discretionary authority granted to the Company’s chief financial
officer. These services may include audit services, audit-related
services, tax services and other services. Pre-approval is generally
detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent accountants and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent accountants in accordance
with this pre-approval, and the fees for the services performed to
date. The Audit Committee may also pre-approve particular services on
a case-by-case basis. The services provided by BPM as described above
were approved by the Audit Committee.
For
fiscal 2009, the Audit Committee considered whether the services rendered by BPM
were compatible with maintaining BPM’s independence as accountants of the
Company’s financial statements, and concluded that they were.
Vote
Required; Recommendation of Board of Directors
Stockholder
ratification of the selection of BPM as the Company’s independent accountants is
not required by applicable law. However, the board of directors is
submitting the selection of BPM to the stockholders for ratification as a matter
of good corporate governance. If the stockholders fail to ratify the
selection, the Audit Committee and the board of directors will reconsider
whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee may, at its discretion, direct the appointment of
a different independent accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
its stockholders.
If a
quorum is present and voting, the affirmative vote of a majority of the shares
voting shall be required to ratify the appointment of
BPM. Abstentions and “broker non-votes” are not counted in the
ratification of BPM’s appointment.
The Company’s
board of directors unanimously recommends a vote “FOR” the ratification of the
appointment of Burr Pilger Mayer, Inc. as the Company’s independent registered
public accounting firm for fiscal 2010
.
EXECUTIVE
COMPENSATION
Executive
Officers
Our
executive officers and their respective ages as of April 12, 2010 were as
follows:
|
|
|
|
|
Robert F.
Kirk
|
54
|
Chief
Executive Officer
|
|
Elias
MurrayMetzger
|
40
|
Chief
Financial Officer, Chief Administrative Officer & Corporate
Secretary
|
|
Stephen M.
Epstein
|
45
|
Chief
Marketing Officer
|
|
Stephen
Westmoreland
|
54
|
Chief
Information Officer
|
|
J. Chris
Lauwers
|
50
|
Chief
Technology Officer
|
|
Anton F.
Rodde
|
66
|
President,
Intellectual Property Division
|
|
Bryan
Kennedy
|
54
|
Vice
President, Business Development
|
Robert F. Kirk
- see
biography in the board of directors section of this proxy.
Elias (Eli) MurrayMetzger
joined Avistar in January 2006 as the Company’s Controller. In
January 2010, Mr. MurrayMetzger received the additional title of Chief
Administrative officer. In April 2009 Mr. MurrayMetzger was
appointed CFO and Corporate Secretary by the Board of Directors after
being promoted to Acting CFO and Acting Corporate Secretary of the Company in
January 2009. Mr. MurrayMetzger brings to Avistar more than 12
years of experience in financial management, regulatory compliance and
operations at technology organizations. Prior to joining Avistar, Mr.
MurrayMetzger served as Assistant Controller of Centra Software, Inc., a
provider of software solutions for online business communication, collaboration
and learning. During his tenure at Centra from April 2004 to January
2006, Mr. MurrayMetzger successfully navigated the company’s Sarbanes-Oxley
compliance effort and all SEC reporting and compliance functions as the company
reached profitability and was sold to Saba, Inc. in February
2006. Prior to Centra, Mr. MurrayMetzger worked for the technology
audit practice of PricewaterhouseCoopers from February 2000 to March
2004. He is a Certified Public Accountant (inactive) and has a
Bachelor of Science in Agribusiness with a concentration in finance from
California Polytechnic State University, San Luis Obispo.
Stephen M. Epstein
joined Avistar in January 2008 as the Company’s Chief Marketing
Officer. Prior to Avistar, he was Vice President; Head of Product
Management at Mantas Inc. from July 2003 to January 2008. From May
2002 to July 2003, Mr. Epstein was Head of Product & Business
Development at Bang Networks. From 1995 to 2002, Mr. Epstein
held senior-level management and product development positions including, Head
of Global Foreign Exchange Sales Technology and Group CTO at Deutsche
Bank. Mr. Epstein attended Vanier College in Montreal,
Canada.
Bryan Kennedy
joined Avistar
in December 2009 as Avistar’s Vice President, Business
Development. Prior to Avistar, Kennedy held executive management
positions at Avid Technology, a leader in digital media solutions, from November
2005 to January 2009. From 2001 to November 2005, Mr. Kennedy was self employed
and provided consulting services related to mergers, acquisitions and corporate
strategy to a variety of businesses. From 1992 to 2001, Mr. Kennedy was General
Partner for Platinum Venture Partners, a leading venture capital firm. Mr.
Kennedy was also a consultant for McKinsey and Company from 1988 to 1992.
Mr. Kennedy received a B.S. in Economics and Finance from Farleigh
Dickenson University and an M.B.A. from the Harvard Business
School.
J. Chris Lauwers
has
been the Company’s Chief Technology Officer since February 2000. He
served as Vice President of Engineering of Avistar Systems from 1994 to
2000. He previously served as Principal Software Architect at Vicor
Inc., a private e-business product solutions and engineering consulting company,
from 1990 to 1994, and as a research associate at Olivetti Research Center from
1987 to 1990. Dr. Lauwers holds a B.S. in electrical engineering
from the Katholieke Universiteit Leuven of Belgium. Dr. Lauwers
also holds an M.S. and a Ph.D. in electrical engineering and computer science
from Stanford University.
Anton F. Rodde
has been the
President of the Company’s Intellectual Property division (organized as a
separate subsidiary and legal entity up until October 2007) since December
2003. Prior to joining Avistar, he served as President and CEO of
Western Data Systems, an ERP software company, from 1991 to 2003, as President
and General Manager of several subsidiaries of Teknekron Corporation, a
technology incubator, from 1984 to 1991, as founder and President of Control
Automation, a robotics company, from 1980 to 1984, and held a variety of
technical and management positions at AT&T from 1970 to
1980. Dr. Rodde holds a B.S. in physics from Benedictine
University and an M.S. and Ph.D. in physics from the Illinois Institute of
Technology.
Stephen Westmoreland
joined
Avistar in September 2009 as Chief Information Officer. Prior to
Avistar, Mr. Westmoreland was the Senior Vice President of Support Operations
for Vicor from December 2003 to September 2009, where he helped grow the company
and played a leading role as part of Metavante’s successful acquisition of
Vicor. Mr. Westmoreland also previously held chief information officer
positions at Damage Studios and VALinux Systems from 1999 to 2003 and earlier,
he held operations and technology positions with Bank of America, Wells Fargo,
and Centex. Mr. Westmoreland holds a B.S. degree in Computer Science from
Louisiana Tech University.
The
following table presents information concerning the total compensation of the
Company’s Chief Executive Officer and the three other most highly compensated
officers (the “Named Executive Officers”) for services rendered to the Company
in all capacities for the fiscal year ended December 31, 2009 and
December 31, 2008:
Name
and Principal Position
|
|
|
Discretionary
Non-Plan
Based
Bonus
($)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
|
All
Other Compensation
($)(2)
|
|
|
Robert F.
Kirk (3)
Chief
Executive Officer
|
2009
2008
|
$
125,827
—
|
—
—
|
—
—
|
$
881,700
|
—
—
|
—
—
|
—
—
|
$
1,007,527
—
|
|
Simon
Moss (4)
Former
Chief Executive Officer
|
2009
2008
|
$
166,235
$
258,333
|
$
99,200
$
109,921
|
—
—
|
$
200,553
$
28,536
|
—
—
|
—
—
|
$
123,750
—
|
$
589,738
$
396,790
|
|
Elias
MurrayMetzger
Chief
Financial Officer, Chief Administrative Officer and Corporate
Secretary
|
2009
2008
|
$
181,383
$
137,539
|
$
—
$
8,000
|
$
44,000
—
|
$
151,934
$
29,507
|
—
—
|
—
—
|
—
—
|
$
377,317
$
175,046
|
|
Stephen
Epstein
Chief
Marketing Officer
|
2009
2008
|
$
235,417
$
216,490
|
$
—
$
27,000
|
$
88,000
—
|
$
125,226
$
238,532
|
—
—
|
—
—
|
—
—
|
$
448,643
$
482,022
|
|
Chris
Lauwers
Chief
Technology Officer
|
2009
2008
|
$
250,000
$
250,000
|
$
20,000
$
12,000
|
$
176,000
—
|
$
20,871
$
28,563
|
—
—
|
—
—
|
—
—
|
$
466,871
$
290,563
|
|
(1)
|
Amounts
shown do not reflect compensation actually received by the named executive
officer. Instead, the amounts represent the aggregate grant
date fair value related to stock option awards, and the
aggregate grant date fair market value related to restricted stock unit
awards, granted in the year indicated, pursuant to Financial Accounting
Standards Codification Topic 718,
Compensation – Stock
Compensation
(ASC718). The amounts for stock options and
restricted stock unit awards from prior years were restated to reflect
aggregate grant the fair value. For a discussion of the
valuation assumptions, see Note 7 to our consolidated financial
statements included in our Annual Report on Form 10-K for the year
ended December 31, 2009. The actual value that may be
realized from an award is contingent upon the satisfaction of the
conditions to vesting in that award on the date the award is
vested. Thus, there is no assurance that the value, if any,
eventually realized will correspond to the amount
shown.
|
|
(2)
|
Compensation
reflects severance payment and consulting fee made to Mr. Moss after
his resignation in July 2009.
|
|
(3)
|
Mr. Kirk
joined Avistar in July 2009 and has an annual base salary of $270,000 per
year.
|
|
(4)
|
Mr. Moss
resigned in July 2009.
|
The
following table presents certain information concerning equity awards held by
the Named Executive Officers at December 31, 2009.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
Number
of Securities Underlying Unexercised Options (#) Exercisable
(1)
|
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable
(1)
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Option (#)
|
|
Option
Exercise Price ($)
|
|
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested (#)
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested ($)(2)
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
(g)
|
(h)
|
|
(i)
|
|
|
(j)
|
|
|
Robert F.
Kirk
Chief
Executive Officer
|
|
|
0
0
|
|
|
|
1,000,000
500,000
|
|
|
|
|
$0.8000
$0.8000
|
|
7/14/2019
7/14/2019
|
|
|
|
|
|
|
|
|
|
Elias
MurrayMetzger
Chief
Financial Officer, Chief Administrative Officer and Corporate
Secretary
|
|
|
9,375
12,500
10,500
0
0
60,058
25,000
|
|
|
|
625
7,500
1,500
48,000
160,000
0
25,000
|
|
|
|
|
$1.7300
$1.6000
$1.2500
$1.1500
$0.9500
$0.8600
$0.6100
|
|
1/18/2016
4/18/2017
5/23/2016
1/21/2019
4/15/2019
4/16/2018
12/5/2017
12/8/2011
|
|
|
|
|
100,000
|
|
|
$
|
45,000
|
|
|
Chris
Lauwers
Chief
Technology Officer
|
|
|
23,188
26,812
50,000
60,278
39,722
22,500
15,000
25,247
18,503
37,500
62,500
43,750
26,250
101,142
23,858
0
112,708
37,292
51,888
6,250
25,000
25,000
|
|
|
|
0
0
0
0
0
0
22,500
0
6,250
0
0
0
0
0
0
30,000
0
0
0
0
0
50,000
|
|
|
|
|
$17.2500
$17.2500
$8.5000
$2.9100
$2.9100
$1.6000
$1.6000
$1.5200
$1.5200
$1.4700
$1.4700
$1.2100
$1.2100
$1.1600
$1.1600
$0.9500
$0.9000
$0.9000
$0.8600
$0.8600
$0.6100
$0.6100
|
|
3/31/2010
3/31/2010
9/18/2010
4/20/2015
4/20/2015
4/18/2017
4/18/2017
4/18/2016
4/18/2016
4/10/2011
4/10/2011
5/14/2012
5/14/2012
4/21/2014
4/21/2014
4/15/2019
4/23/2013
4/23/2013
4/16/2018
4/16/2018
12/5/2017
12/5/2017
12/8/2011
|
|
|
|
|
400,000
|
|
|
$
|
180,000
|
|
|
Stephen
Epstein
Chief
Marketing Officer
|
|
|
0
0
106,382
2,993
22,425
29,899
|
|
|
|
154,342
25,658
140,625
0
0
0
|
|
|
|
|
$0.9500
$0.9500
$0.9400
$0.9400
$0.8600
$0.8600
|
|
4/15/2019
4/15/2019
1/23/2018
1/23/2018
4/16/2018
4/16/2018
12/8/2011
|
|
|
|
|
200,000
|
|
|
$
|
90,000
|
|
|
(1)
|
The
options identified above generally vest over a four-year period with 1/4th
of the shares vesting on the first anniversary of the vesting commencement
date and 1/16th of the shares subject to the option vesting at the end of
each subsequent three month period until the option is fully
vested. These options are also included in the Summary
Compensation Table and do not constitute additional
compensation.
|
|
(2)
|
The
restricted stock units identified above vest 100% on the second
anniversary of the vesting commencement date. The market value of
these restricted stock units at December 31, 2009 are
calculated based on the closing price of Avistar’s common stock as quoted
on the Pink Sheets as of December 31, 2009 of $0.45.These restricted stock
units are also included in the Summary Compensation Table (at their
respective grant date fair value) and do not constitute additional
compensation.
|
Employment
Arrangements and Change of Control Arrangements
Avistar
entered into an Employment Agreement with Robert Kirk, Avistar’s CEO
effective as of July 14, 2009. Pursuant to this agreement, if
Mr. Kirk’s employment is terminated without cause and he executes a
standard release of claims with the Company, he is entitled to
receive:
|
·
|
Payment
of his base salary for a period of six months following his
termination;
|
|
·
|
Six
months of additional exercisability of stock vested options held by
Mr. Kirk, measured from the termination
date;
|
|
·
|
Reimbursement
for the cost of continued life insurance and health plan coverage for a
period of six months from the date of his termination;
and
|
|
·
|
The
portion of the projected bonus for the fiscal year in which such
termination of employment occurs, accrued up to the date of termination as
determined by the Company’s Compensation Committee in its sole
discretion.
|
In the
event of a change of control prior to July 14, 2011, 50% of the shares
subject to Mr. Kirk’s stock options will immediately become fully vested
and exercisable. The Employment Agreement entered into by Avistar
with Mr. Kirk was filed on November 3, 2009 as an exhibit to Avistar’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2009. Pursuant to the agreement, a change of control is deemed to
occur:
|
|
(i)
|
upon
any person becoming a beneficial owner, directly or indirectly, of
securities of the Company representing more than 50% of the total voting
power represented by the Company’s then outstanding voting securities,
except Gerald J. Burnett;
|
|
|
(ii)
|
upon
consummation of a merger or consolidation of the Company as a result of
which its stockholders just prior to such event have less than 50% of the
voting power of the surviving entity;
or
|
|
|
(iii)
|
upon
the consummation of the sale or disposition by the Company of all or
substantially all of the Company’s
assets.
|
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding
any statement to the contrary in any of our previous or future filings with the
SEC, this report of the Audit Committee of the board of directors shall not be
deemed “filed” with the SEC or “soliciting material” under the 1934 Act, and
shall not be incorporated by reference into any such filings.
The Audit
Committee evaluates audit performance, manages relations with our independent
registered public accounting firm and evaluates policies and procedures relating
to internal accounting functions and controls. The board has adopted
a written charter for the Audit Committee which details the responsibilities of
the Audit Committee. This report relates to the activities undertaken
by the Audit Committee in fulfilling such responsibilities.
The audit
committee members are not active professional accountants or auditors, and their
functions are not intended to duplicate or to certify the activities of
management and the independent registered public accounting firm. The
Audit Committee oversees Avistar’s financial reporting process on behalf of the
board. Management has the primary responsibility for the financial
statements and reporting process, including the systems of internal
controls. In fulfilling its oversight responsibilities, the Audit
Committee reviews Avistar’s financial statements and discusses the quality and
acceptability of the controls, including the clarity of disclosures in the
financial statements with management. The Audit Committee also
reviews the financial statements with Burr Pilger Mayer, Inc., Avistar’s
independent registered public accounting firm, who are responsible for
expressing an opinion on the conformity of Avistar’s audited financial
statements with accounting principles generally accepted in the United States,
their judgments as to the quality and the acceptability of Avistar’s financial
reporting.
The Audit
Committee has reviewed and discussed the audited financial statements of the
Company for the fiscal year ended December 31, 2009 with
management. In addition, the Audit Committee has discussed with Burr
Pilger Mayer, Inc., the Company’s independent registered public accounting firm,
the matters required to be discussed by Statement on Auditing Standards No. 114
(The Auditor’s Communications with Those Charged with
Governance). The Audit Committee also has received the written
disclosures and the letter from BPM as required by the Public Company Accounting
Oversight Board Interim Independence Standards and the Audit Committee has
discussed the independence of BPM with that firm.
Based on
the Audit Committee’s review of the matters noted above and its discussions with
the Company’s independent registered public accounting firm and its management,
the Audit Committee recommended to the Board of Directors that the financial
statements be included in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2009.
Respectfully
submitted by the Audit Committee of the Company’s board of
directors:
William L.
Campbell (Chairman)
Craig F.
Heimark
Certain
Relationships and Related Transactions and Director Independence
Transactions
with UBS Warburg LLC
UBS
Warburg LLC, a stockholder of the Company, and its affiliates have purchased
systems and services from the Company in the past and may continue to do so in
the future. In 2009, such purchases constituted 8% of the Company’s
revenue.
Transactions
with Management and Others
On
December 22, 2009 and
again on January 12, 2010
, the
Company renewed and amended its Loan and Security Agreement with a financial
institution to borrow up to $11.25 million under a revolving line of credit
through and including March 30, 2010 and then decreased the line of credit to
$6.0 million. The maximum facility amount was then further reduced to $5.0
million in March 2010 for the remainder of the period through the maturity date
on December 21, 2010. The agreement includes a first priority
security interest in all of our assets. Gerald Burnett, our chairman,
provided a collateralized guarantee to the financial institution, assuring
payment of our obligations under the agreement and as a consequence, a number of
restrictive covenants were eliminated. Dr. Burnett also provided a personal
guarantee to the Company assuring the Company a line of credit of up to $7.0
million with the same terms and mechanisms as the existing revolving line of
credit, if needed, through March 31, 2011.
Wilson
Sonsini Goodrich & Rosati, Professional Corporation (“WSGR”) is a law
firm that has provided legal services to the Company since its inception, and
prior to that, to its predecessor entities. For 2009, the Company
paid WSGR $233,809 in legal fees. Mr. Latta, a former director
of the Company, is a member of WSGR. It is anticipated that WSGR will
continue to provide legal services to the Company in the current
year.
The Audit
Committee of our board of directors is charged with reviewing in advance any
proposed transaction or series of similar transactions in which the amount
involved exceeds or will exceed $120,000, and in which any current director,
executive officer, holder of more than 5% of our capital stock, or any member of
the immediate family of any of the foregoing, has or will have a direct or
indirect material interest, other than the compensation agreements described in
“Executive Compensation.” We intend that any such future transactions will be
reviewed and approved by the Audit Committee, and will be on terms no less
favorable to our Company than could be obtained from unaffiliated third
parties.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the 1934 Act requires the Company’s executive officers and directors,
and persons who own more than ten percent of a registered class of the Company’s
equity securities, to file reports of ownership and changes in ownership with
the SEC and the National Association of Securities Dealers,
Inc. Executive officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of
the copies of such forms received by it, or written representations from
reporting persons, the Company believes that during 2009, all executive
officers, directors and greater than ten percent stockholders complied with all
applicable filing requirements with the exception of Messrs. Innes and Kirk each
of whom had one delinquent Form 4 filing . In each case, a Form 4 was filed late
by a single day.
Other
Matters
The
Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the shares they represent as the board of directors may
recommend.
The
Company has adopted a procedure approved by the SEC called “house
holding.” Under this procedure, a house holding notice will be sent
to stockholders who have the same address and last name and do not participate
in electronic delivery of proxy materials, and they will receive only one copy
of our annual report and proxy statement unless one or more of these
stockholders notifies the Company that they wish to continue receiving
individual copies. This procedure reduces our printing costs and
postage fees. Each stockholder who participates in house holding will
continue to receive a separate proxy card.
If any
stockholders in your household wish to receive a separate annual report and a
separate proxy statement, they may contact the Company at (650)
525-3300. They may also send an email to Investor Relations at
ir@avistar.com. Other stockholders who have multiple accounts in
their names or who share an address with other stockholders can authorize us to
discontinue mailings of multiple annual reports and proxy statements by calling
or writing to Investor Relations.
BY ORDER OF THE BOARD OF
DIRECTORS
Robert F. Kirk
Chief Executive
Officer
Appendix A
Amended
and Restated Bylaws of Avistar Communications Corporation
BYLAWS
OF
AVISTAR
COMMUNICATIONS CORPORATION
(a
Delaware corporation)
ARTICLE
I
CORPORATE
OFFICES
The
registered office of the corporation shall be fixed in the Certificate of
Incorporation of the corporation.
The Board
of Directors of the corporation (the “Board of Directors” or the “Board”) may at
any time establish
branch or
subordinate
other
offices at any place or places where the corporation is qualified to do
business.
ARTICLE
II
MEETINGS OF
STOCKHOLDERS
Meetings
of stockholders shall be held at any place within or outside the State of
Delaware designated by the Board of Directors.
The
Board of Directors may, in its sole discretion, determine that a meeting of
stockholders shall not be held at any place, but may instead be held solely by
means of remote communication as authorized by Section 211(a)(2) of the Delaware
General Corporation Law (the “DGCL”).
In the absence of any
such designation, stockholder’s meetings shall be held at the registered office
of the corporation.
2.2
ANNUAL
MEETING
(a)
The
annual meeting of stockholders shall be held
each year on a date and
at a time designated by the Board of Directors. At the meeting,
directors shall be elected, and any other proper business may be
transacted.
at
any place within or outside the State of Delaware designated by the Board of
Directors. At the meeting, directors shall be elected and any other
proper business may be transacted.
(b)
At an annual meeting of
the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting.
To be properly brought
before an annual meeting, business must be
: (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder. For business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a stockholder’s notice must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than thirty (30) calendar days in advance of the date specified in the
corporation’s proxy statement released to stockholders in connection with the
previous year’s annual meeting of stockholders;
provided
,
however
, that in the event that
no annual meeting was held in the previous year or the date of the annual
meeting has been changed by more than thirty (30) days from the date
contemplated at the time of the previous year’s proxy statement, notice by the
stockholder to be timely must be so received a reasonable time before the
solicitation is made. A stockholder’s notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
corporation’s books, of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business and
(v) subsequent to the corporation’s becoming subject to the reporting
requirements
of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”),
any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Exchange Act, in his capacity as a
proponent to a stockholder proposal. Notwithstanding anything in
these Bylaws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this paragraph
(b). The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this paragraph (b),
and, if he should so determine, he shall so declare at the meeting that any such
business not properly brought before the meeting shall not be
transacted.
(c)
Only persons who are
nominated in accordance with the procedures set forth in this paragraph (c)
shall be eligible for election as directors. Nominations of persons
for election to the Board of Directors of the corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors or by
any stockholder of the corporation entitled to vote in the election of directors
at the meeting;
provided
,
however
, such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation in
accordance with the provisions of paragraph (b) of this Section
2.2. Such stockholder’s notice shall set forth (i) as to each person,
if any, whom the stockholder proposes to nominate for election or re-election as
a director: (A) the name, age, business address and residence address
of such person, (B) the principal occupation or employment of such person, (C)
the class and number of shares of the corporation which are beneficially owned
by such person, (D) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nominations are to be made by the
stockholder, and (E) any other information relating to such person that is
required to be disclosed (or would be required were the corporation subject to
the reporting requirements of the Exchange Act) in solicitations of proxies for
elections of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including without limitation such
person’s written consent to being named in the proxy statement, if any, as a
nominee and to serving as a director if elected); and (ii) as to such
stockholder giving notice, the information required to be provided pursuant to
paragraph (b) of this Section 2.2. At the request of the Board of
Directors, any person nominated by a stockholder for election as a director
shall furnish to the Secretary of the corporation that information required to
be set forth in the stockholder’s notice of nomination which pertains to the
nominee. No person shall be eligible for election as a director of
the corporation unless nominated in accordance with the procedures set forth in
this paragraph (c). The chairman of the meeting shall, if the facts
warrants, determine and declare at the meeting that a nomination was not made in
accordance with the procedures
prescribed by these
Bylaws, and if
he should so determine,
he
shall so
declare at the meeting, and the defective nomination
shall be
disregarded.
2.3
SPECIAL
MEETING
(a)
A special
meeting of the stockholders
,
other than those required by statute,
may be called at any time by the
Board of Directors
,
acting pursuant to a resolution adopted by a majority of the Whole Board, or
by
the President, or by the Chairman of the Board, or in the absence of
the Chairman of the Board by the Chief Executive Officer, or by one or more
stockholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes at that meeting, but such special meetings may not be
called by any other person or persons.
For purposes of these Bylaws, the term “Whole Board” shall mean the total number
of authorized directors whether or not there exist any vacancies in previously
authorized directorships. The Board of Directors acting pursuant to a resolution
adopted by a majority of the Whole Board may cancel, postpone or reschedule any
previously scheduled special meeting at any time, before or after the notice for
such meeting has been sent to the stockholders.
(b)
The
notice of a special meeting shall include the purpose for which the meeting is
called. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting by or at the
direction of the Whole Board. Nothing contained in this Section
2.3(b)
shall be construed as limiting, fixing
or affecting the time when a meeting of stockholders called by action of the
board
of directors may be held.
2.4
ADVANCE
NOTICE PROCEDURES
(a)
Advance
Notice of Stockholder Business.
At
an annual meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting.
To
be properly brought before an annual meeting, business must be
brought: (A) pursuant to the corporation’s proxy materials with respect to such
meeting, (B) by or at the direction of the board of directors, or (C) by a
stockholder of the corporation who (1) is a stockholder of record at the time of
the giving of the notice required by this Section and on the record date for the
determination of stockholders entitled to vote at the annual meeting and (2) has
timely complied in proper written form with the notice procedures set forth in
this Section 2.4(a). In addition, for business to be properly brought before an
annual meeting by a stockholder, such business must be a proper matter for
stockholder action pursuant to these Bylaws and applicable law. For the
avoidance of doubt, clause (C) above shall be the exclusive means for a
stockholder to bring business before an annual meeting of
stockholders.
(i)
To
comply with clause (C) of Section 2.4(a) above, a stockholder’s notice must set
forth all information required under this Section 2.4(a) and must be timely
received by the secretary of the corporation. To be timely, a stockholder’s
notice must be received by the secretary at the principal executive offices of
the corporation not later than the 45th day nor earlier than the 75th day before
the one-year anniversary of the date on which the corporation first mailed its
proxy materials or a notice of availability of proxy materials (whichever is
earlier) for the preceding year’s annual meeting;
provided
,
however
,
that in the event that no annual meeting was held in the previous year or if the
date of the annual meeting is advanced by more than 30 days prior to or delayed
by more than 60 days after the one-year anniversary of the date of the previous
year’s annual meeting, then, for notice by the stockholder to be timely, it must
be so received by the secretary not earlier than the close of business on the
120th day prior to such annual meeting and not later than the close of business
on the later of (i) the 90th day prior to such annual meeting, or (ii) the tenth
day following the day on which Public Announcement (as defined below) of the
date of such annual meeting is first made. In no event shall any adjournment or
postponement of an annual meeting or the announcement thereof commence a new
time period for the giving of a stockholder’s notice as described in this
Section 2.4(a)(i). “Public Announcement” shall mean disclosure in a press
release reported by the Dow Jones News Service, Associated Press or a comparable
national news service or in a document publicly filed by the corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d)
of the Securities Exchange Act of 1934, as amended
,
or any successor thereto (the “1934 Act”).
(ii)
To
be in proper written form, a stockholder’s notice to the secretary must set
forth as to each matter of business the stockholder intends to bring before the
annual meeting: (1) a brief description of the business intended to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (2) the name and address, as they appear on the corporation’s
books, of the stockholder proposing such business and any Stockholder Associated
Person (as defined below), (3) the class and number of shares of the corporation
that are held of record or are beneficially owned by the stockholder or any
Stockholder Associated Person and any derivative positions held or beneficially
held by the stockholder or any Stockholder Associated Person, (4) whether and
the extent to which any hedging or other transaction or series of transactions
has been entered into by or on behalf of such stockholder or any Stockholder
Associated Person with respect to any securities of the corporation, and a
description of any other agreement, arrangement or understanding (including any
short position or any borrowing or lending of shares), the effect or intent of
which is to mitigate loss to, or to manage the risk or benefit from share price
changes for, or to increase or decrease the voting power of, such stockholder or
any Stockholder Associated Person with respect to any securities of the
corporation, (5) any material interest of the stockholder or a Stockholder
Associated Person in such business, and (6) a statement whether either such
stockholder or any Stockholder Associated Person will deliver a proxy statement
and form of proxy to holders of at least the percentage of the corporation’s
voting shares required under applicable law to carry the proposal (such
information provided and statements made as required by clauses (1) through (6),
a “Business Solicitation Statement”). In addition, to be in proper written form,
a stockholder’s notice to the secretary must be supplemented not later than ten
days following the record date to disclose the information contained in clauses
(3) and (4) above as of the record date. For purposes of this Section 2.4, a
“Stockholder Associated Person” of any stockholder shall mean (i) any person
controlling, directly or indirectly, or acting in concert with, such
stockholder, (ii) any beneficial owner of shares of stock of the corporation
owned of record or beneficially by such stockholder and on whose behalf the
proposal or nomination, as the case may be, is being made, or (iii) any person
controlling, controlled by or under common control with such person referred to
in the preceding clauses (i) and (ii).
(iii)
Without
exception, no business shall be conducted at any annual meeting except in
accordance with the provisions set forth in this Section 2.4(a) and, if
applicable, Section 2.4(b). In addition, business proposed to be brought by a
stockholder may not be brought before the annual meeting if such stockholder or
a Stockholder Associated Person, as applicable, takes action contrary to the
representations made in the Business Solicitation Statement applicable to such
business or if the Business Solicitation Statement applicable to such business
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein not misleading. The chairman of
the annual meeting shall, if the facts warrant, determine and declare at the
annual meeting that business was not properly brought before the annual meeting
and in accordance with the provisions of this Section 2.4(a), and, if the
chairman should so determine, he or she shall so declare at the annual meeting
that any such business not properly brought before the annual meeting shall not
be conducted.
(b)
If a special meeting is
called by any person or persons other than the Board of Directors, the request
shall be in writing, specifying the time of such meeting and the general nature
of the business proposed to be transacted, and shall be delivered personally or
sent by registered mail or by telegraphic or other facsimile transmission to the
Chairman of the Board, the President, Chief Executive Officer, or the Secretary
of the corporation. A
stockholder’s notice to
the
Secretary shall set forth
as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be
brought before the special meeting and the reasons for conducting such business
at the special meeting, (ii) the name and address, as they appear on the
corporation’s books, of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business and
(v) subsequent to the corporation’s becoming subject to the reporting
requirements of the Exchange Act, any other information that is required to be
provided by the stockholder
pursuant to Regulation
14A under the
Exchange Act, in his
capacity as a proponent to a stockholder proposal.
Notwithstanding anything
in these Bylaws to the contrary,
no business shall be
conducted at any special meeting except in accordance with the procedures set
forth in this paragraph (b).
The chairman of the
special meeting shall, if the facts warrant, determine and declare at the
meeting that
business was not properly
brought before the meeting and in accordance with the provisions of this
paragraph (b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted. The officer receiving the request shall cause notice
to be promptly given to the stockholders entitled to vote, in accordance with
the provisions of Sections 2.4 and 2.5, that a meeting will be held at the time
requested by the person or persons who called the meeting, not less than
thirty-five (35) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after the
receipt of the request, the person or persons requesting the meeting may give
the notice. Nothing contained in this paragraph of this Section
2.3
shall be
construed as limiting, fixing
,
or affecting the time
when a meeting of stockholders called by action of the
Board of Directors may be
held.
Advance
Notice of Director Nominations at Annual Meetings.
Notwithstanding
anything in these Bylaws to the contrary,
only
persons who are nominated in accordance with the procedures set forth in this
Section 2.4(b) shall be eligible for election or re-election as directors at an
annual meeting of stockholders. Nominations of persons for election to the board
of directors of the corporation shall be made at an annual meeting of
stockholders only (A) by or at the direction of the board of directors or (B) by
a stockholder of the corporation who (1) was a stockholder of record at the time
of the giving of the notice required by this Section 2.4(b) and on the record
date for the determination of stockholders entitled to vote at the annual
meeting and (2) has complied with the notice procedures set forth in this
Section 2.4(b). In addition to any other applicable requirements, for a
nomination to be made by a stockholder, the stockholder must have given timely
notice thereof in proper written form to the secretary of the
corporation.
(i)
To
comply with clause (B) of Section 2.4(b) above, a nomination to be made by a
stockholder must set forth all information required under this Section 2.4(b)
and must be received by the secretary of the corporation at the principal
executive offices of the corporation at the time set forth in, and in accordance
with, the final three sentences of Section 2.4(a)(i) above.
(ii)
To
be in proper written form, such
stockholder’s notice to the
secretary
must set forth:
(1)
(c) Only persons who are
nominated in accordance with the procedures set forth in this paragraph (c)
shall be eligible for election as directors. Nominations of persons
for election to the Board of Directors of the corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors or by
any stockholder of the corporation entitled to vote in the election of directors
at the meeting;
provided
,
however
, such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation in
accordance with the provisions of paragraph (b) of this Section
2.3. Such stockholder’s notice shall set forth (i) as to each person,
if any,
as
to each person (a “nominee”)
whom the stockholder proposes to nominate
for election or re-election as a director:
(A) the
name, age, business address and residence address of
such person
the
nominee
, (B) the principal occupation or employment of
such person
the
nominee
, (C) the class and number of shares of the corporation
which
that
are held of record or
are beneficially owned by
such person,
(D
the
nominee and any derivative positions held or beneficially held by the nominee,
(D) whether and the extent to which any hedging or other transaction or series
of transactions has been entered into by or on behalf of the nominee with
respect to any securities of the corporation, and a description of any other
agreement, arrangement or understanding (including any short position or any
borrowing or lending of shares), the effect or intent of which is to mitigate
loss to, or to manage the risk or benefit of share price changes for, or to
increase or decrease the voting power of the nominee, (E
) a description
of all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nominations are to be made by the stockholder,
and (E
(F)
a written statement executed by the nominee acknowledging that
as a director of the corporation
,
the nominee will owe a fiduciary duty under Delaware law with respect to the
corporation and its stockholders, and (G
) any other information relating
to
such
person
the
nominee
that
is
would
be
required to be disclosed
(or would be required
were the corporation subject to the reporting requirements of the Exchange Act)
in solicitations of proxies for elections of directors
about
such nominee if proxies were being solicited for the election of the nominee as
a director
, or
that
is otherwise required, in each case
pursuant to Regulation
14A under the Exchange
pursuant to Regulation 14A under the
1934
Act (including without limitation
such person
the
nominee
’s written consent to being named in the proxy statement, if any,
as a nominee and to serving as a director if elected); and
(ii)
as to such stockholder
giving notice,
the information required
to be provided pursuant to paragraph (b) of this Section 2.3. At the
request of the Board of Directors
, any person nominated by
a stockholder for election as a director
shall furnish to the
Secretary of the corporation that information required to be set forth in the
stockholder’s notice of nomination which pertains to the nominee. No
person shall be eligible for election
as a director of the
corporation
unless nominated in accordance with the
procedures set forth in
this paragraph (c). The chairman of the meeting shall, if the facts
warrants, determine and declare at the meeting that a nomination
was not made in
accordance with the procedures prescribed by these Bylaws, and if
he should so determine,
he shall so declare at the
meeting, and the
defective nomination shall be disregarded.
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|
2.4
|
NOTICE OF
STOCKHOLDERS’ MEETINGS
|
Except as set forth in
Section 2.3, all notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 2.5 of these Bylaws not less than ten (10) nor
more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the Board of Directors, at
the time of giving the notice, intends to present for action by the stockholders
(but any proper matter may be presented at the meeting for such action). The
notice of any meeting at which directors are to be elected shall include the
name of any nominee or nominees who, at the time of the notice, the Board
intends to present for election.
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|
2.5
|
MANNER OF GIVING
NOTICE; AFFIDAVIT OF NOTICE
|
Written notice of any
meeting of stockholders shall be given either personally or by first-class mail
or by telegraphic or other written communication. Notices not
personally delivered shall be sent charges prepaid and shall be addressed to the
stockholder at the address of that stockholder appearing on the books of the
corporation or given by the stockholder to the corporation for the purpose of
notice. If no such address
appears on the
corporation’s
books or is given, notice
shall be deemed to have been given if sent to that stockholder by mail or
telegraphic or other written communication to the corporation’s principal
executive office, or if published at least once in a newspaper of general
circulation in the county where that office is located. Notice shall
be deemed to have been given at the time when delivered personally or deposited
in the mail or sent by telegram or other means of written
communication.
If any notice addressed
to a stockholder at the address of that stockholder appearing on the books of
the corporation is returned to the corporation by the United States Postal
Service marked to indicate that the United States Postal Service is unable to
deliver the notice to the stockholder at that address, then all future notices
or reports shall be deemed to have been duly given without further mailing if
the same shall be available to the stockholder on written demand of the
stockholder at the principal executive office of the corporation for a period of
one (1) year from the date of the giving of the notice.
An affidavit of the
mailing or other means of giving any notice of any stockholders’ meeting,
executed by the secretary, assistant secretary or any transfer agent of the
corporation giving the notice, shall be prima facie evidence of the giving of
such notice.
(2)
as
to such stockholder giving notice,
(A)
the information required to be provided pursuant to clauses (2) through (5) of
Section 2.4(a)(ii) above, and the supplement referenced in the second sentence
of Section 2.4(a)(ii) above (except that the references to “business” in such
clauses shall instead refer to nominations of directors for purposes of this
paragraph), and (B) a statement whether either such stockholder or Stockholder
Associated Person will deliver a proxy statement and form of proxy to holders of
a number of the corporation’s voting shares reasonably believed by such
stockholder or Stockholder Associated Person to be necessary to elect such
nominee(s) (such information provided and statements made as required by clauses
(A) and (B) above, a “Nominee Solicitation Statement”).
(iii)
At
the request of the board of directors
,
any person nominated by a stockholder for election as a director
must
furnish to the secretary of the corporation (1) that information required to be
set forth in the stockholder’s notice of nomination of such person as a director
as of a date subsequent to the date on which the notice of such person’s
nomination was given and (2) such other information as may reasonably be
required by the corporation to determine the eligibility of such proposed
nominee to serve as an independent director of the corporation or that could be
material to a reasonable stockholder’s understanding of the independence, or
lack thereof, of such nominee; in the absence of the furnishing of such
information if requested, such stockholder’s nomination shall not be considered
in proper form pursuant to this Section 2.4(b).
(iv)
Without
exception, no person shall be eligible for election or re-election as a director
of the corporation at an annual meeting of stockholders
unless nominated in accordance with the
provisions
set forth in this Section 2.4(b). In addition, a nominee shall not be eligible
for election or re-election if a stockholder or Stockholder Associated Person,
as applicable, takes action contrary to the representations made in the Nominee
Solicitation Statement applicable to such nominee or if the Nominee Solicitation
Statement applicable to such nominee contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein
not misleading. The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the annual meeting that a nomination was not made in
accordance with the provisions
prescribed by these Bylaws, and if
the
chairman should so determine, he or she shall so declare at the
annual
meeting, and the defective nomination shall be disregarded.
(c)
Advance
Notice of Director Nominations for Special Meetings.
(i)
For
a special meeting of stockholders at which directors are to be elected pursuant
to Section 2.3, nominations of persons for election to the board of directors
shall be made only (1) by or at the direction of the board of directors or (2)
by any stockholder of the corporation who (A) is a stockholder of record at the
time of the giving of the notice required by this Section 2.4(c) and on the
record date for the determination of stockholders entitled to vote at the
special meeting and (B) delivers a timely written notice of the nomination to
the secretary of the corporation that includes the information set forth in
Sections 2.4(b)(ii) and (b)(iii) above. To be timely, such notice must be
received by the secretary at the principal executive offices of the corporation
not later than the close of business on the later of the 90th day prior to such
special meeting or the tenth day following the day on which Public Announcement
is first made of the date of the special meeting and of the nominees proposed by
the board of directors to be elected at such meeting. A person shall not be
eligible for election or re-election as a director at a special meeting unless
the person is nominated (i) by or at the direction of the board of directors or
(ii) by a stockholder in accordance with the notice procedures set forth in this
Section 2.4(c). In addition, a nominee shall not be eligible for election or
re-election if a stockholder or Stockholder Associated Person, as applicable,
takes action contrary to the representations made in the Nominee Solicitation
Statement applicable to such nominee or if the Nominee Solicitation Statement
applicable to such nominee contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein not
misleading.
(ii)
The
chairman of the special meeting shall, if the facts warrant, determine and
declare at the meeting that
a
nomination or business
was not made in accordance with the procedures prescribed by these Bylaws, and
if
the
chairman should so determine, he or she
shall so declare at the meeting, and the defective nomination
or
business shall be disregarded.
(d)
Other
requirements and Rights.
In
addition to the foregoing provisions of this Section 2.4, a stockholder must
also comply with all applicable requirements of state law and of the 1934 Act
and the rules and regulations thereunder with respect to the matters set forth
in this Section 2.4, including, with respect to business such stockholder
intends to bring before the annual meeting that involves a proposal that such
stockholder requests to be included in the corporation’s proxy statement, the
requirements of Rule 14a-8 (or any successor provision) under the 1934 Act.
Nothing in this Section 2.4 shall be deemed to affect any right of the
corporation to omit a proposal from the corporation’s proxy statement pursuant
to Rule 14a-8 (or any successor provision) under the 1934
Act.
Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, at
each meeting of stockholders the
presence in person or by
proxy of the
holders of
shares of stock
having
a majority of the
votes which could be cast
by the holders of all
stock
issued and
outstanding
shares of
stock
and
entitled to vote
at
the meeting shall be necessary and sufficient to
,
present in person or represented by proxy shall
constitute a
quorum. In the absence of a quorum,
either
the stockholders so present
may
, by majority
vote,
or
the chairman of the meeting may
adjourn the meeting from time to time in
the manner provided in Section
2.7
2.6
of these Bylaws until a quorum shall attend. Shares of its own stock
belonging to the corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the corporation, shall neither be entitled
to vote nor be counted for quorum purposes;
provided
,
however
, that the
foregoing shall not limit the right of the corporation to vote stock, including
but not limited to its own stock, held by it in a fiduciary
capacity. The stockholders present at a duly called or held meeting
at which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.
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2.6
|
2.7
ADJOURNED MEETING; NOTICE
|
Any stockholders’
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of the majority of the shares represented at that
meeting, either in person or by proxy. In the absence of a quorum, no
other business may be transacted at that meeting except as provided in Section
2.6 of these Bylaws.
When
any
a
meeting
of
stockholders, either annual or special,
is adjourned to another time or
place,
unless
these Bylaws otherwise require,
notice need not be given of the adjourned
meeting if the time
and place
,
place if any thereof, and the means of remote communications if any by which
stockholders and proxy holders may be deemed to be present in person and vote at
such adjourned meeting
are announced at the meeting at which the
adjournment is taken.
However, if a new record
date
for the
adjourned meeting
is fixed or
if
the
adjournment is for more than
thirty (30) days from the
date set for the original meeting, then
At
the adjourned meeting,
the corporation may transact any business which might have been transacted at
the original
meeting. If
the adjournment is for more than
30
days, or if after the adjournment a new record date is fixed
for the adjourned meeting
,
a
notice of the adjourned meeting shall be given
. Notice of
any such adjourned meeting shall be given
to each stockholder of record
entitled to vote at the
adjourned meeting in
accordance with the provisions of Sections 2.4 and 2.5 of these
Bylaws. At any adjourned meeting
the corporation may
transact any business which might have been transacted at the original
meeting.
The
stockholders entitled to vote at any meeting of stockholders shall be determined
in accordance with the provisions of Section
2.11
2.10
of these Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law
of Delaware
DGCL
(relating to voting rights of fiduciaries, pledgors and joint owners, and to
voting trusts and other voting agreements).
Except as
may be otherwise provided in the Certificate of Incorporation, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote of the stockholders. Any stockholder entitled to
vote on any matter may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or, except when the matter is the
election of directors, may vote them against the proposal; but, if the
stockholder fails to specify the number of shares which the stockholder is
voting affirmatively, it will be conclusively presumed that the stockholder’s
approving vote is with respect to all shares which the stockholder is entitled
to vote.
If a
quorum is present, the affirmative vote of the majority of the shares
represented and voting at a duly held meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum) shall be the act of
the stockholders, unless the vote of a greater number or a vote by classes is
required by law or by the Certificate of Incorporation.
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2.8
|
2.9
VALIDATION OF MEETINGS; WAIVER OF NOTICE;
CONSENT
|
The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though they had been
taken at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if, either before or after the
meeting, each person entitled to vote, who was not present in person or by
proxy, signs a written waiver of notice
,
or a waiver by electronic transmission,
or a consent to the holding of
the meeting or an approval of the minutes thereof. The waiver of
notice or consent or approval need not specify either the business to be
transacted or the purpose of any annual or special meeting of
stockholders. All such waivers, consents, and approvals shall be
filed with the corporate records or made a part of the minutes of the
meeting.
Attendance
by a person at a meeting shall also constitute a waiver of notice of and
presence at that meeting, except when the person objects at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Attendance at a meeting is not a waiver of any
right to object to the consideration of matters required by law to be included
in the notice of the meeting but not so included, if that objection is expressly
made at the meeting.
|
2.9
|
2.10
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING
|
Subject
to any limitations set forth in the Certificate of Incorporation, any action
which may be taken at any annual or special meeting of stockholders may be taken
without a meeting and without prior notice, if a consent in writing, setting
forth the action so taken, is signed by the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to authorize
or take that action at a meeting at which all shares entitled to vote on that
action were present and voted.
Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the
General Corporation Law
of Delaware
DGCL
if such action had been voted on by stockholders at a meeting thereof, then the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
notice and written consent have been given as provided in Section 228 of the
General Corporation
Law of Delaware
DGCL
.
|
2.10
|
2.11
RECORD
DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING
CONSENTS
|
For
purposes of determining the stockholders entitled to notice of any meeting or to
vote thereat or entitled to give consent to corporate action without a meeting,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) days nor less than ten (10) days before the date of any
such meeting nor more than sixty (60) days before any such action without a
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date.
If the
Board of Directors does not so fix a record date:
(a)
the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the business day
next preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held; and
(b)
the
record date for determining stockholders entitled to give consent to corporate
action in writing without a meeting, (i) when no prior action by the Board has
been taken, shall be the day on which the first written consent is given, or
(ii) when prior action by the Board has been taken, shall be at the close of
business on the day on which the Board adopts the resolution relating to that
action.
The
record date for any other purpose shall be as provided in Article VIII of these
Bylaws.
Every person entitled to
vote for directors, or on any other matter, shall have the right to do so either
in person or by one or more agents authorized by a written proxy signed by the
person and filed with the secretary of the corporation
Each
stockholder entitled to vote at a meeting of stockholders may authorize another
person or persons to act for such stockholder by proxy authorized by an
instrument in writing or by a transmission permitted by law filed in accordance
with the procedure established for the meeting
, but no such proxy shall
be voted or acted upon after three
(3)
years from
its date, unless the proxy provides for a longer period.
A proxy shall be deemed
signed if the stockholder’s name is placed on the proxy (whether by manual
signature, typewriting, telegraphic transmission or otherwise) by the
stockholder or the stockholder’s attorney-in-fact.
The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212
(c)
of the
General Corporation Law
of Delaware
DGCL
.
|
2.12
|
2.13
INSPECTORS OF ELECTION
|
Before
any meeting of stockholders, the Board of Directors may appoint an inspector or
inspectors of election to act at the meeting or its adjournment. If
no inspector of election is so appointed, then the chairman of the meeting may,
and on the request of any stockholder or a stockholder’s proxy shall, appoint an
inspector or inspectors of election to act at the meeting. The number
of inspectors shall be either one (1) or three (3). If inspectors are
appointed at a meeting pursuant to the request of one (1) or more stockholders
or proxies, then the holders of a majority of shares or their proxies present at
the meeting shall determine whether one (1) or three (3) inspectors are to be
appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, then the chairman of the meeting may, and upon the
request of any stockholder or a stockholder’s proxy shall, appoint a person to
fill that vacancy.
Such
inspectors shall:
(a)
determine
the number of shares outstanding and the voting power of each, the number of
shares represented at the meeting, the existence of a quorum, and the
authenticity, validity, and effect of proxies;
(b)
receive
votes, ballots or consents;
(c)
hear and
determine all challenges and questions in any way arising in connection with the
right to vote;
(d)
count and
tabulate all votes or consents;
(e)
determine
when the polls shall close;
(f)
determine
the result; and
(g)
do any
other acts that may be proper to conduct the election or vote with fairness to
all stockholders.
ARTICLE
III
DIRECTORS
Subject
to the provisions of the
General Corporation Law
of Delaware
DGCL
and to any limitations in the Certificate of Incorporation or these Bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be
managed
and all
corporate powers shall be exercised
by or under the direction of the
Board of Directors.
The
number of directors of the corporation shall be not less than five (5) nor more
than nine (9). The current number of authorized directors is
seven (7)
six
(6)
. The indefinite number of directors may be changed, or a
definite number may be fixed without provision for an indefinite number, by a
duly adopted amendment to the certificate of incorporation or by an amendment to
the certificate of incorporation or by an amendment to this bylaw duly adopted
by the vote or written consent of holders of a majority of the outstanding
shares entitled to vote. Directors need not be
stockholders. No reduction of the authorized number of directors
shall have the effect of removing any director before that director’s term of
office expires.
|
3.3
|
ELECTION,
QUALIFICATION AND TERM OF OFFICE OF
DIRECTORS
|
Except as
provided in Section 3.4 of these Bylaws, at each annual meeting of stockholders,
directors of the Corporation shall be elected to hold office until the
expiration of the term for which they are elected, and until their successors
have been duly elected and qualified; except that if any such election shall not
be so held, such election shall take place at a stockholders’ meeting called and
held in accordance with the Delaware General Corporation Law.
Directors
need not be stockholders unless so required by the Certificate of Incorporation
or these Bylaws, wherein other qualifications for directors may be
prescribed.
Elections
of directors need not be by written ballot.
Notwithstanding
the foregoing provisions of this Article, each director shall serve until his
successor is duly elected and qualified or until his earlier death, resignation
or removal.
|
3.4
|
RESIGNATION
AND VACANCIES
|
Any
director may resign effective on giving written notice to the Chairman of the
Board, the President, the secretary or the Board of Directors, unless the notice
specifies a later time for that resignation to become effective. If
the resignation of a director is effective at a future time, the Board of
Directors may elect a successor to take office when the resignation becomes
effective.
Unless
otherwise provided in the Certificate of Incorporation or these Bylaws,
vacancies in the Board of Directors may be filled by a majority of the remaining
directors, even if less than a quorum, or by a sole remaining director;
however
, a vacancy
created by the removal of a director by the vote or written consent of the
stockholders or by court order may be filled only by the affirmative vote of a
majority of the shares represented and voting at a duly held meeting at which a
quorum is present (which shares voting affirmatively also constitute a majority
of the required quorum), or by the unanimous written consent of all shares
entitled to vote thereon. Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless
otherwise provided in the Certificate of Incorporation or these
Bylaws:
(i)
Vacancies
and newly created directorships resulting from any increase in the authorized
number of directors elected by all of the stockholders having the right to vote
as a single class may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director.
(ii)
Whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the provisions of the Certificate of
Incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.
If at any
time, by reason of death or resignation or other cause, the corporation should
have no directors in office, then any officer or any stockholder or an executor,
administrator, trustee or guardian of a stockholder, or other fiduciary
entrusted with like responsibility for the person or estate of a stockholder,
may call a special meeting of stockholders in accordance with the provisions of
the Certificate of Incorporation or these Bylaws, or may apply to the Court of
Chancery for a decree summarily ordering an election as provided in Section 211
of the
General
Corporation Law of Delaware
DGCL
.
If, at
the time of filling any vacancy or any newly created directorship, the directors
then in office constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), then the Court of Chancery
may, upon application of any stockholder or stockholders holding at least ten
(10) percent of the total number of the shares at the time outstanding having
the right to vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office as aforesaid, which election
shall be governed by the provisions of Section 211 of the
General Corporation Law
of Delaware
DGCL
as far as applicable.
Subject
to any limitations imposed by law, and unless otherwise provided in the
Certificate of Incorporation, the Board of Directors, or any individual
director, may be removed from office with or without cause at any time by the
affirmative vote of the holders of at least a majority of the then outstanding
shares of the capital stock of the corporation entitled to vote at an election
of directors.
|
3.6
|
PLACE
OF MEETINGS; MEETINGS BY TELEPHONE
|
Regular
meetings of the Board of Directors may be held at any place within or outside
the State of Delaware that has been designated from time to time by resolution
of the Board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the
corporation. Special meetings of the Board may be held at any place
within or outside the State of Delaware that has been designated in the notice
of the meeting or, if not stated in the notice or if there is no notice, at the
principal executive office of the corporation.
Any
meeting, regular or special, may be held by
means
of
conference telephone or
similar
communication
other
communications
equipment,
so long as
by
means of which
all
directors
persons
participating in the meeting can hear one another; and all such directors shall
be deemed to be present in person at the meeting.
The first meeting of each
newly elected Board of Directors shall be held at such time and place as shall
be fixed by the vote of the stockholders at the annual meeting and no notice of
such meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present. In the event of
the failure of the stockholders to fix the time or place of such first meeting
of the newly elected Board of Directors, or in the event such meeting is not
held at the time and place so fixed by the stockholders, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the
directors.
Regular
meetings of the Board of Directors may be held without notice
if the times of such
meetings are fixed
at
such time and at such place as shall from time to time be determined
by
the Board of Directors.
|
3.8
|
3.9
SPECIAL
MEETINGS; NOTICE
|
Special
meetings of the Board of Directors for any purpose or purposes may be called at
any time by the Chairman of the Board, or in the absence of the Chairman of the
Board by the Chief Executive Officer or any three directors.
Notice of
the time and place of special meetings shall be
:
delivered
personally
by
hand, by courier
or by telephone
to each director or
;
sent
by
United States
first-class mail
or telegram, charges
prepaid, addressed
,
postage prepaid;
sent
by facsimile; or
sent
by electronic mail,
directed
to each director at that director’s address
as it is
,
telephone number, facsimile number or electronic mail address, as the case may
be, as
shown on the
records of the
corporation
’s
records
.
If
the notice is mailed
If
the notice is (i) delivered personally by hand, by courier or by telephone, (ii)
sent by facsimile or (iii) sent by electronic mail, it shall be delivered or
sent at least twenty-four (24
)
hours before the time of the holding of the meeting.
If the notice is sent by United States mail
, it shall be deposited in the
United States mail at least four (4) days before the time of the holding of the
meeting.
If the
notice is delivered personally or by telephone or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48
) hours before the time
of the holding of the meeting.
Any oral
notice given personally or by telephone
Any
oral notice
may be communicated
either to the director or
to a person at the office of the director who the person giving the notice has
reason to believe will promptly communicate it
to the director.
The notice
need not specify the purpose or the place of the meeting, if the meeting is to
be held at the
corporation’s
principal executive office of the corporation.
A
majority of the authorized number of directors shall constitute a quorum for the
transaction of business, except to adjourn as provided in Section
3.12
3.11
of these Bylaws. Every act or decision done or made by a majority of
the directors present at a duly held meeting at which a quorum is present shall
be regarded as the act of the Board of Directors, subject to the provisions of
the Certificate of Incorporation and applicable law.
A meeting
at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, if any action taken is approved by
at least a majority of the required quorum for that meeting.
|
3.10
|
3.11
WAIVER
OF NOTICE
|
Notice of
a meeting need not be given to any director (i) who signs a waiver of
notice
,
or a waiver by electronic transmission,
or a consent to holding the
meeting or an approval of the minutes thereof, whether before or after the
meeting, or (ii) who attends the meeting without protesting, prior thereto or at
its commencement, the lack of notice to such directors. All such
waivers, consents, and approvals shall be filed with the corporate records or
made part of the minutes of the meeting. A waiver of notice need not
specify the purpose of any regular or special meeting of the Board of
Directors.
A
majority of the directors present, whether or not constituting a quorum, may
adjourn any meeting to another time and place.
|
3.12
|
3.13
NOTICE
OF ADJOURNMENT
|
Notice of
the time and place of holding an adjourned meeting need not be given unless the
meeting is adjourned for more than twenty-four (24) hours. If the
meeting is adjourned for more than twenty-four (24) hours, then notice of the
time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section
3.9
3.8
of these Bylaws, to the directors who were not present at the time of the
adjournment.
|
3.13
|
3.14
BOARD
ACTION BY WRITTEN CONSENT WITHOUT A
MEETING
|
Any
action required or permitted to be taken by the Board of Directors
,
or any committee thereof,
may be taken without a meeting, provided that
all members of the Board
or
committee, as the case may be,
individually or collectively consent in
writing
or by electronic transmission
to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
Board of Directors. Such
written
consent
in
writing or by electronic transmission, as the case may be,
and any
counterparts thereof shall be filed with the minutes of the proceedings of the
Board.
|
3.14
|
3.15
FEES
AND COMPENSATION OF DIRECTORS
|
Directors
and members of committees may receive such compensation, if any, for their
services and such reimbursement of expenses as may be fixed or determined by
resolution of the Board of Directors. This Section
3.15
3.14
shall not be construed to preclude any director from serving the corporation in
any other capacity as an officer, agent, employee or otherwise and receiving
compensation for those services.
|
|
3.16
|
APPROVAL OF LOANS
TO OFFICERS
|
The corporation may lend
money to, or guarantee any obligation of, or otherwise assist any officer or
other employee of the corporation or of its subsidiary, including any officer or
employee who is a director of the corporation or its subsidiary, whenever, in
the judgment of the directors, such loan, guaranty or assistance may reasonably
be expected to benefit the corporation. The loan, guaranty or other
assistance may be with or without interest and may be unsecured, or secured in
such manner as the Board of Directors shall approve, including, without
limitation, a pledge of shares of stock of the corporation. Nothing
contained in this Section 3.16 shall be deemed to deny, limit or restrict the
powers of guaranty or warranty of the corporation at common law or under any
statute.
ARTICLE
IV
COMMITTEES
|
4.1
|
COMMITTEES
OF DIRECTORS
|
The Board
of Directors may, by resolution adopted by a majority of the authorized number
of directors, designate one (1) or more committees, each consisting of two or
more directors, to serve at the pleasure of the Board. The Board may
designate one (1) or more directors as alternate members of any committee, who
may replace any absent
or disqualified
member at any meeting of the committee. The
appointment of members or alternate members of a committee requires the vote of
a majority of the authorized number of directors. Any committee, to
the extent provided in the resolution of the Board, shall have all the authority
of the Board, but no such committee shall have the power or authority to (i)
amend the Certificate of Incorporation (except that a committee may, to the
extent authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in Section 151(a)
of the
General
Corporation Law of Delaware
DGCL
,
fix any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), (ii) adopt an agreement of merger or consolidation
under Sections 251 or 252 of the
General Corporation Law
of Delaware
DGCL
,
(iii) recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation’s property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the Bylaws of the corporation; and, unless the Board
resolution establishing the committee, the Bylaws or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law
of Delaware
DGCL
.
|
4.2
|
MEETINGS
AND ACTION OF COMMITTEES
|
Meetings
and actions of committees shall be governed by, and held and taken in accordance
with, the provisions of Article III of these Bylaws, Section 3.6 (place of
meetings), Section
3.8
3.7
(regular meetings), Section
3.9
3.8
(special meetings and notice), Section
3.10
3.9
(quorum), Section
3.11
3.10
(waiver of notice), Section
3.11
(adjournment), Section
3.12 (
notice
of
adjournment),
and
Section 3.13
(notice of adjournment),
and Section 3.14
(action without meeting), with such changes in the
context of those Bylaws as are necessary to substitute the committee and its
members for the Board of Directors and its members;
provided
,
however
, that the
time of regular meetings of committees may be determined either by resolution of
the Board of Directors or by resolution of the committee, that special meetings
of committees may also be called by resolution of the Board of Directors, and
that notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The Board of Directors may adopt rules for the government
of any committee not inconsistent with the provisions of these
Bylaws.
ARTICLE
V
OFFICERS
The
officers of the corporation shall consist of a Chairman of the Board, a Chief
Executive Officer, a Secretary and a Chief Financial Officer. The
corporation may also have, at the discretion of the Board of Directors, a
President, one or more Vice Presidents, one or more assistant secretaries, one
or more assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these Bylaws. Any
number of offices may be held by the same person.
The
officers of the corporation, except such officers as may be appointed in
accordance with the provisions of Section 5.3 or Section 5.5 of these Bylaws,
shall be chosen by the Board, subject to the rights, if any, of an officer under
any contract of employment.
The Board
of Directors may appoint, or may empower the President to appoint, such other
officers as the business of the corporation may require, each of whom shall hold
office for such period, have such authority, and perform such duties as are
provided in these Bylaws or as the Board of Directors may from time to time
determine.
|
5.4
|
REMOVAL
AND RESIGNATION OF OFFICERS
|
Subject
to the rights, if any, of an officer under any contract of employment, any
officer may be removed, either with or without cause, by the Board of Directors
at any regular or special meeting of the Board or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any
officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the
receipt of that notice or at any later time specified in that notice; and,
unless otherwise specified in that notice, the acceptance of the resignation
shall not be necessary to make it effective. Any resignation is
without prejudice to the rights, if any, of the corporation under any contract
to which the officer is a party.
A vacancy
in any office because of death, resignation, removal, disqualification or any
other cause shall be filled in the manner prescribed in these Bylaws for regular
appointments to that office.
|
5.6
|
CHAIRMAN
OF THE BOARD
|
The
Chairman of the Board, if such an officer be elected, shall serve as the
corporation’s general manager, and shall have general supervision, direction and
control of the corporation’s business and its officers, and, if present, preside
at meetings of the stockholders and the Board of Directors and exercise and
perform such other powers and duties as may from time to time be assigned to him
by the Board of Directors or as may be prescribed by these Bylaws. If
there is no Chief Executive Officer, then the Chairman of the Board shall also
be the Chief Executive Officer of the corporation and shall have the powers and
duties prescribed in Section 5.7 of these Bylaws. The Chairman of the
Board shall report to the Board of Directors.
|
5.7
|
CHIEF
EXECUTIVE OFFICER
|
Subject
to such powers, if any, as may be given by the Board of Directors to the
Chairman of the Board, if there be such an officer, the Chief Executive Officer
shall, subject to the control of the Chairman of the Board, or the Board of
Directors if there is no Chairman of the Board, have general supervision,
direction, and control of the business and the officers of the
corporation. He or she shall preside at all meetings of the
stockholders and the Board of Directors, in the absence or nonexistence of a
Chairman of the Board. He or she shall have the general powers and
duties of management usually vested in the office of President of a corporation,
and shall have such other powers and duties as may be prescribed by the Board of
Directors or these Bylaws.
In the
absence or disability of the President, the Vice Presidents, if any, in order of
their rank as fixed by the Board of Directors or, if not ranked, a Vice
President designated by the Board of Directors, shall perform all the duties of
the President and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors, these Bylaws, the
President or the Chairman of the Board.
The
Secretary shall keep or cause to be kept, at the principal executive office of
the corporation or such other place as the Board of Directors may direct, a book
of minutes of all meetings and actions of directors, committees of directors and
stockholders. The minutes shall show the time and place of each
meeting, whether regular or special (and, if special, how authorized and the
notice given), the names of those present at directors’ meetings or committee
meetings, the number of shares present or represented at stockholders’ meetings,
and the proceedings thereof.
The
Secretary shall keep, or cause to be kept, at the principal executive office of
the corporation or at the office of the corporation’s transfer agent or
registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The
Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors required to be given by law or by
these Bylaws. He or she shall keep the seal of the corporation, if
one be adopted, in safe custody and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or by these
Bylaws.
|
5.10
|
CHIEF
FINANCIAL OFFICER
|
The Chief
Financial Officer shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be
open to inspection by any director.
The Chief
Financial Officer shall deposit all money and other valuables in the name and to
the credit of the corporation with such depositaries as may be designated by the
Board of Directors. He or she shall disburse the funds of the corporation as may
be ordered by the Board of Directors, shall render to the President and
directors, whenever they request it, an account of all of his or her
transactions as Chief Financial Officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or these Bylaws.
ARTICLE
VI
INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS
|
6.1
|
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
|
The
corporation shall, to the maximum extent and in the manner permitted by the
General Corporation
Law of Delaware
DGCL
,
indemnify each of its directors and officers against expenses (including
attorneys’ fees), judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding, arising by reason of the
fact that such person is or was an agent of the corporation. For
purposes of this Section 6.1, a “director” or “officer” of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
|
6.2
|
INDEMNIFICATION
OF OTHERS
|
The
corporation shall have the power, to the maximum extent and in the manner
permitted by the
General Corporation Law
of Delaware
DGCL
,
to indemnify each of its employees and agents (other than directors and
officers) against expenses (including attorneys’ fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Section 6.2, an
“employee” or “agent” of the corporation (other than a director or officer)
includes any person (i) who is or was an employee or agent of the corporation,
(ii) who is or was serving at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was an employee or agent of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
The
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the
General Corporation Law
of Delaware
DGCL
.
ARTICLE
VII
RECORDS AND
REPORTS
|
7.1
|
MAINTENANCE
AND INSPECTION OF RECORDS
|
The
corporation shall, either at its principal executive office or at such place or
places as designated by the Board of Directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books and other records.
Any
stockholder of record, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the corporation’s
stock ledger, a list of its stockholders, and its other books and records and to
make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person’s interest as a
stockholder. In every instance where an attorney or other agent is
the person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing that authorizes the
attorney or other agent to so act on behalf of the stockholder. The demand under
oath shall be directed to the corporation at its registered office in Delaware
or at its principal place of business.
The
officer who has charge of the stock ledger of a corporation shall prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is
present.
|
7.2
|
INSPECTION
BY DIRECTORS
|
Any
director shall have the right to examine the corporation’s stock ledger, a list
of its stockholders and its other books and records for a purpose reasonably
related to his or her position as a director. The Court of Chancery is hereby
vested with the exclusive jurisdiction to determine whether a director is
entitled to the inspection sought. The Court may summarily order the corporation
to permit the director to inspect any and all books and records, the stock
ledger, and the stock list and to make copies or extracts
therefrom. The Court may, in its discretion, prescribe any
limitations or conditions with reference to the inspection, or award such other
and further relief as the Court may deem just and proper.
|
7.3
|
ANNUAL
STATEMENT TO STOCKHOLDERS
|
The Board
of Directors shall present at each annual meeting, and at any special meeting of
the stockholders when called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
|
7.4
|
REPRESENTATION
OF SHARES OF OTHER CORPORATIONS
|
The
Chairman of the Board, the President, any Vice President, the Chief Financial
Officer, the secretary or assistant secretary of this corporation, or any other
person authorized by the Board of Directors or the President or a Vice
President, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The
authority herein granted may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.
ARTICLE
VIII
GENERAL
MATTERS
|
8.1
|
RECORD
DATE FOR PURPOSES OTHER THAN NOTICE AND
VOTING
|
For
purposes of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any other lawful action (other
than action by stockholders by written consent without a meeting), the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action. In that case, only stockholders of
record at the close of business on the date so fixed are entitled to receive the
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date so fixed, except as otherwise provided by
law.
If the
Board of Directors does not so fix a record date, then the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board adopts the applicable resolution or the sixtieth
(60th) day before the date of that action, whichever is later.
|
8.2
|
CHECKS;
DRAFTS; EVIDENCES OF INDEBTEDNESS
|
From time
to time, the Board of Directors shall determine by resolution which person or
persons may sign or endorse all checks, drafts, other orders for payment of
money, notes or other evidences of indebtedness that are issued in the name of
or payable to the corporation, and only the persons so authorized shall sign or
endorse those instruments.
|
8.3
|
CORPORATE
CONTRACTS AND INSTRUMENTS: HOW
EXECUTED
|
The Board
of Directors, except as otherwise provided in these Bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so
authorized or ratified by the Board of Directors or within the agency power of
an officer, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
|
8.4
|
STOCK
CERTIFICATES; PARTLY PAID SHARES
|
The
shares of a corporation shall be represented by certificates, provided that the
Board of Directors of the corporation may provide by resolution or resolutions
that some or all of any or all classes or series of its stock shall be
uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the
Board of Directors, every holder of stock represented by certificates and upon
request every holder of uncertificated shares shall be entitled to have a
certificate signed by, or in the name of the corporation by, the chairman or
vice-chairman of the Board of Directors, or the President or Vice-President, and
by the Chief Financial Officer, the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of
issue.
The
corporation may issue the whole or any part of its shares as partly paid and
subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares,
the corporation shall declare a dividend upon partly paid shares of the same
class, but only upon the basis of the percentage of the consideration actually
paid thereon.
|
8.5
|
SPECIAL
DESIGNATION ON CERTIFICATES
|
If the
corporation is authorized to issue more than one class of stock or more than one
series of any class, then the powers, the designations, the preferences, and the
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate that the corporation shall issue to represent such
class or series of stock;
provided
,
however
, that, except
as otherwise provided in Section 202 of the
General Corporation Law
of Delaware
DGCL
,
in lieu of the foregoing requirements there may be set forth on the face or back
of the certificate that the corporation shall issue to represent such class or
series of stock a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, the designations, the preferences,
and the relative, participating, optional or other special rights of each class
of stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.
Except as
provided in this Section 8.6, no new certificates for shares shall be issued to
replace a previously issued certificate unless the latter is surrendered to the
corporation and canceled at the same time. The Board of Directors
may, in case any share certificate or certificate for any other security is
lost, stolen or destroyed, authorize the issuance of replacement certificates on
such terms and conditions as the Board may require; the Board may require
indemnification of the corporation secured by a bond or other adequate security
sufficient to protect the corporation against any claim that may be made against
it, including any expense or liability, on account of the alleged loss, theft or
destruction of the certificate or the issuance of the replacement
certificate.
|
|
8.7
|
CONSTRUCTION;
DEFINITIONS
|
Unless the context
requires otherwise, the general provisions, rules of construction, and
definitions in the
General Corporation Law
of Delaware
shall govern the construction of these Bylaws. Without limiting the
generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term “person” includes both a
corporation and a natural person.
ARTICLE
IX
MANNER
OF GIVING NOTICE AND WAIVER
|
9.1
|
NOTICE
OF STOCKHOLDERS’ MEETINGS
|
Notice
of any meeting of stockholders, if mailed, is given when deposited in the United
States mail, postage prepaid, directed to the stockholder at such stockholder’s
address as it
appears on the corporation’s
records. An
affidavit of the secretary or an assistant secretary of the corporation or of
the transfer agent or other agent of the corporation that the notice has been
given shall, in the absence of fraud, be
prima
facie
evidence of the facts stated therein.
|
9.2
|
NOTICE
BY ELECTRONIC TRANSMISSION
|
Without
limiting the manner by which notice otherwise may be given effectively to
stockholders pursuant to the DGCL, the certificate of incorporation or these
Bylaws, any notice to stockholders given by the corporation under any provision
of the DGCL, the certificate of incorporation or these Bylaws shall be effective
if given by a form of electronic transmission consented to by the stockholder to
whom the notice is given. Any such consent shall be revocable by the
stockholder by written notice to the corporation. Any such consent
shall be deemed revoked if:
(i)
the
corporation is unable to deliver by electronic transmission two consecutive
notices given by the corporation in accordance with such consent;
and
(ii)
such
inability becomes known to the secretary or an assistant secretary of the
corporation or to the transfer agent, or other person responsible for the giving
of notice.
However,
the inadvertent failure to treat such inability as a revocation shall not
invalidate any meeting or other action.
Any
notice given pursuant to the preceding paragraph shall be deemed
given:
(i)
if
by facsimile telecommunication, when directed to a number at which the
stockholder has consented to receive notice;
(ii)
if
by electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice;
(iii)
if
by a posting on an electronic network together with separate notice to the
stockholder of such specific posting, upon the later of (A) such posting and (B)
the giving of such separate notice; and
(iv)
if
by any other form of electronic transmission, when directed to the
stockholder.
An
affidavit of the secretary or an assistant secretary or of the transfer agent or
other agent of the corporation that the notice has been given by a form of
electronic transmission shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.
An
“electronic transmission” means any form of communication, not directly
involving the physical transmission of paper, that creates a record that may be
retained, retrieved, and reviewed by a recipient thereof, and that may be
directly reproduced in paper form by such a recipient through an automated
process.
Notice
by a form of electronic transmission shall not apply to Sections 164, 296, 311,
312 or 324 of the DGCL.
|
9.3
|
NOTICE
TO STOCKHOLDERS SHARING AN
ADDRESS
|
Except
as otherwise prohibited under the DGCL, without limiting the manner by which
notice otherwise may be given effectively to stockholders, any notice to
stockholders given by the corporation under the provisions of the DGCL, the
certificate of incorporation or these Bylaws shall be effective if given by a
single written notice to stockholders who share an address if consented to by
the stockholders at that address to whom such notice is given. Any
such consent shall be revocable by the stockholder by written notice to the
corporation. Any stockholder who fails to object in writing to the
corporation, within 60 days of having been given written notice by the
corporation of its intention to send the single notice, shall be deemed to have
consented to receiving such single written notice.
|
9.4
|
NOTICE
TO PERSON WITH WHOM COMMUNICATION IS
UNLAWFUL
|
Whenever
notice is required to be given, under the DGCL, the certificate of incorporation
or these Bylaws, to any person with whom communication is unlawful, the giving
of such notice to such person shall not be required and there shall be no duty
to apply to any governmental authority or agency for a license or permit to give
such notice to such person. Any action or meeting which shall be
taken or held without notice to any such person with whom communication is
unlawful shall have the same force and effect as if such notice had been duly
given. In the event that the action taken by the corporation is such
as to require the filing of a certificate under the DGCL, the certificate shall
state, if such is the fact and if notice is required, that notice was given to
all persons entitled to receive notice except such persons with whom
communication is unlawful.
ARTICLE
X
AMENDMENTS
The
original or other Bylaws of the corporation may be adopted, amended or repealed
by the stockholders entitled to vote;
provided
,
however
, that the
corporation may, in its Certificate of Incorporation, confer the power to adopt,
amend or repeal Bylaws upon the directors. The fact that such power
has been so conferred upon the directors shall not divest the stockholders of
the power, nor limit their power to adopt, amend or repeal Bylaws.
ARTICLE
XI
DISSOLUTION
If it
should be deemed advisable in the judgment of the Board of Directors of the
corporation that the corporation should be dissolved, the Board, after the
adoption of a resolution to that effect by a majority of the whole Board at any
meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the
meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the
corporation entitled to vote thereon votes for the proposed dissolution, then a
certificate stating that the dissolution has been authorized in accordance with
the provisions of Section 275 of the
General Corporation Law
of Delaware
DGCL
and setting forth the names and residences of the directors and officers shall
be executed, acknowledged, and filed and shall become effective in accordance
with Section 103 of the
General Corporation Law
of Delaware
DGCL
. Upon
such certificate’s becoming effective in accordance with Section 103 of the
General Corporation
Law of Delaware
DGCL
,
the corporation shall be dissolved.
Whenever
all the stockholders entitled to vote on a dissolution consent in writing,
either in person or by duly authorized attorney, to a dissolution, no meeting of
directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the
General Corporation Law
of Delaware
DGCL
. Upon
such consent’s becoming effective in accordance with Section 103 of the
General Corporation Law
of Delaware
DGCL
,
the corporation shall be dissolved. If the consent is signed by an
attorney, then the original power of attorney or a photocopy thereof shall be
attached to and filed with the consent. The consent filed with the
Secretary of State shall have attached to it the affidavit of the secretary or
some other officer of the corporation stating that the consent has been signed
by or on behalf of all the stockholders entitled to vote on a dissolution; in
addition, there shall be attached to the consent a certification by the
secretary or some other officer of the corporation setting forth the names and
residences of the directors and officers of the corporation.
ARTICLE
XII
CUSTODIAN
|
12.1
|
10.1
APPOINTMENT OF A CUSTODIAN IN CERTAIN
CASES
|
The Court
of Chancery, upon application of any stockholder, may appoint one or more
persons to be custodians and, if the corporation is insolvent, to be receivers,
of and for the corporation when:
(i)
at any
meeting held for the election of directors the stockholders are so divided that
they have failed to elect successors to directors whose terms have expired or
would have expired upon qualification of their successors; or
(ii)
the
business of the corporation is suffering or is threatened with irreparable
injury because the directors are so divided respecting the management of the
affairs of the corporation that the required vote for action by the Board of
Directors cannot be obtained and the stockholders are unable to terminate this
division; or
(iii)
the
corporation has abandoned its business and has failed within a reasonable time
to take steps to dissolve, liquidate or distribute its assets.
|
12.2
|
10.2
DUTIES
OF CUSTODIAN
|
The
custodian shall have all the powers and title of a receiver appointed under
Section 291 of the
General Corporation Law
of Delaware
DGCL
,
but the authority of the custodian shall be to continue the business of the
corporation and not to liquidate its affairs and distribute its assets, except
when the Court of Chancery otherwise orders and except in cases arising under
Sections 226(a)(3) or 352(a)(2) of the
General Corporation Law
of Delaware
DGCL
.
ARTICLE
XIII
GENERAL
MATTERS
|
13.1
|
CONSTRUCTION;
DEFINITIONS
|
Unless
the context requires otherwise, the general provisions, rules of construction,
and definitions in the
DGCL
shall govern the construction of these Bylaws. Without limiting the
generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term “person” includes both a
corporation and a natural person
.
Appendix B
Avistar
Communications Corporation 2010 Employee Stock Purchase Plan
AVISTAR
COMMUNICATIONS CORPORATION
2010
EMPLOYEE STOCK PURCHASE PLAN
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 through accumulated
Contributions (as defined in Section 2(j) below). The Company’s
intention is to have the Plan qualify as an “employee stock purchase plan” under
Section 423 of the Code. The provisions of the Plan, accordingly,
will be construed so as to extend and limit Plan participation in a uniform and
nondiscriminatory basis consistent with the requirements of Section 423 of the
Code.
2.
Definitions
.
(a)
“
Administrator
” means
the Board or any Committee designated by the Board to administer the Plan
pursuant to Section 14.
(b)
“
Applicable Laws
”
means the requirements relating to the administration of equity-based awards
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 are, or will be, granted under the Plan.
(c)
“
Board
” means the
Board of Directors of the Company.
(d)
“
Change in Control
”
means the occurrence of any of the following events:
(i)
Change in Ownership of the
Company
. A change in the ownership of the Company which occurs
on the date that any one person (other than Gerald J. Burnett and his
affiliates) or more than one person acting as a group, (“
Person
”), acquires
ownership of the stock of the Company that, together with the stock held by such
Person, constitutes more than fifty percent (50%) of the total voting power of
the stock of the Company, except that any change in the ownership of the stock
of the Company as a result of a private financing of the Company that is
approved by the Board will not be considered a Change in Control;
or
(ii)
Change in Effective Control
of the Company
. If the Company has a class of securities
registered pursuant to Section 12 of the Exchange Act, a change in the effective
control of the Company which occurs on the date that a majority of members of
the Board is replaced during any twelve (12) month period by Directors whose
appointment or election is not endorsed by a majority of the members of the
Board prior to the date of the appointment or election. For purposes
of this clause (ii), if any Person is considered to be in effective control of
the Company, the acquisition of additional control of the Company by the same
Person will not be considered a Change in Control; or
(iii)
Change in Ownership of a
Substantial Portion of the Company’s Assets
. A change in the
ownership of a substantial portion of the Company’s assets which occurs on the
date that any Person acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value equal
to or more than fifty percent (50%) of the total gross fair market value of all
of the assets of the Company immediately prior to such acquisition or
acquisitions, provided that the sale or grant of an exclusive license to the
Company’s patent portfolio alone will not be considered a Change in
Control. For purposes of this subsection (iii), gross fair market
value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.
For
purposes of this Section 2(d), persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.
Notwithstanding
the foregoing, a transaction will not be deemed a Change in Control unless the
transaction qualifies as a change in control event within the meaning of Code
Section 409A, as it has been and may be amended from time to time, and any
proposed or final Treasury Regulations and Internal Revenue Service guidance
that has been promulgated or may be promulgated thereunder from time to
time.
Further
and for the avoidance of doubt, a transaction will not constitute a Change in
Control if: (i) its sole purpose is to change the state of the Company’s
incorporation, or (ii) its sole purpose is to create a holding company that will
be owned in substantially the same proportions by the persons who held the
Company’s securities immediately before such transaction.
(e)
“
Code
” means the U.S.
Internal Revenue Code of 1986, as amended. Reference to a specific
section of the Code or Treasury Regulation thereunder will include such section
or regulation, any valid regulation or other official applicable guidance
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or
regulation.
(f)
“
Committee
” means a
committee of the Board appointed in accordance with Section 14
hereof.
(g)
“
Common Stock
” means
the common stock of the Company.
(h)
“
Company
” means
Avistar Communication Corporation, a Delaware corporation, or any successor
thereto.
(i)
“
Compensation
” means
all cash compensation reportable on Form W-2, including without limitation base
straight time gross earnings, sales commissions, payments for overtime, shift
premiums, incentive compensation, incentive payments and bonuses, plus any
amounts contributed by the Employee to the Company’s 401(k) Plan from
compensation paid to the Employee by the Company.
(j)
“
Contributions
” means
the payroll deductions and other additional payments that the Company may permit
to be made by a Participant to fund the exercise of options granted pursuant to
the Plan.
(k)
“
Designated
Subsidiary
” means any Subsidiary that has been designated by the
Administrator from time to time in its sole discretion as eligible to
participate in the Plan.
(l)
“
Director
” means a
member of the Board.
(m)
“
Eligible Employee
”
means any individual who is a common law employee of the Company or a Designated
Subsidiary and is customarily employed for at least twenty (20) hours per week
and more than five (5) months in any calendar year by the Employer, or any
lesser number of hours per week and/or number of months in any calendar year
established by the Administrator (if required under applicable local law) for
purposes of any separate Offering. For purposes of the Plan, the
employment relationship will be treated as continuing intact while the
individual is on sick leave or other leave of absence that the Employer
approves. Where the period of leave exceeds three (3) months and the
individual’s right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated three
(3) months and one (1) day following the commencement of such
leave. The Administrator, in its discretion, from time to time may,
prior to an Enrollment Date for all options to be granted on such Enrollment
Date, determine (on a uniform and nondiscriminatory basis) that the definition
of Eligible Employee will or will not include an individual if he or she: (i)
has not completed at least two (2) years of service since his or her last hire
date (or such lesser period of time as may be determined by the Administrator in
its discretion), (ii) customarily works not more than twenty (20) hours per
week (or such lesser period of time as may be determined by the Administrator in
its discretion), (iii) customarily works not more than five (5) months per
calendar year (or such lesser period of time as may be determined by the
Administrator in its discretion), (iv) is a highly compensated employee
within the meaning of Section 414(q) of the Code with compensation above a
certain level or is an officer or subject to the disclosure requirements of
Section 16(a) of the Exchange Act, provided the exclusion is applied with
respect to each Offering in an identical manner to all highly compensated
individuals of the Employer whose Employees are participating in that
Offering.
(n)
“
Employer
” means the
employer of the applicable Eligible Employee(s).
(o)
“
Enrollment Date
”
means the first Trading Day of each Offering Period.
(p)
“
Exchange Act
” means
the Securities Exchange Act of 1934, as amended, including the rules and
regulations promulgated thereunder.
(q)
“
Exercise Date
” means
the first Trading Day on or after February 1 and August 1 of each
year.
(r)
“
Fair Market Value
”
means, as of any date and unless the Administrator determines otherwise, 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 Global Select Market, the NASDAQ
Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair
Market Value will be the closing sales price for such stock as quoted on such
exchange or system on the date of determination (or on the last preceding
Trading Day for which such quotation exists if the date of determination is not
a Trading Day), 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, its Fair Market Value will be the mean between the high
bid and low asked prices for the Common Stock on the date of determination (or
on the last preceding Trading Day if the date of determination is not a Trading
Day), 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
thereof will be determined in good faith by the Administrator.
(s)
“
New Exercise Date
”
means a new Exercise Date if the Administrator shortens any Offering Period then
in progress.
(t)
“
Offering
” means an
offer under the Plan of an option that may be exercised during an Offering
Period as further described in Section 4. For purposes of this Plan,
the Administrator may designate separate Offerings under the Plan (the terms of
which need not be identical) in which Employees of one or more Employers will
participate, even if the dates of the applicable Offering Periods of each such
Offering are identical.
(u)
“
Offering Periods
”
means the periods of approximately six (6) months during which an option granted
pursuant to the Plan may be exercised, commencing on the first Trading Day on or
after February 1 and August 1 of each year and terminating on the Exercise Date
approximately six (6) months later. The duration and timing of
Offering Periods may be changed pursuant to Sections 4 and 20.
(v)
“
Parent
” means a
“parent corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code.
(w)
“
Participant
” means an
Eligible Employee that participates in the Plan.
(x)
“
Plan
” means this
Avistar Communication Corporation 2010 Employee Stock Purchase
Plan.
(y)
“
Purchase Price
” means
an amount equal to eighty-five percent (85%) of the Fair Market Value of a share
of Common Stock on the Enrollment Date or on the Exercise Date, whichever is
lower; provided however, that the Purchase Price may be determined for
subsequent Offering Periods by the Administrator subject to compliance with
Section 423 of the Code (or any successor rule or provision or any other
applicable law, regulation or stock exchange rule) or pursuant to Section
20.
(z)
“
Subsidiary
” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.
(aa)
“
Trading Day
” means a
day on which the national stock exchange upon which the Common Stock is listed
is open for trading.
3.
Eligibility
.
(a)
Offering
Periods
. Any Eligible Employee on a given Enrollment Date will
be eligible to participate in the Plan, subject to the requirements of Section
5. Employees who are citizens or residents of a non-U.S. jurisdiction
may be excluded from participation in the Plan or an Offering if the
participation of such Employees is prohibited under the laws of the applicable
jurisdiction or if complying with the laws of the applicable jurisdiction would
cause the Plan or an Offering to violate Section 423 of the Code.
(b)
Limitations
. Any
provisions of the Plan to the contrary notwithstanding, no Eligible Employee
will be granted an option under the Plan (i) to the extent that, immediately
after the grant, such Eligible Employee (or any other person whose stock would
be attributed to such Eligible Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company or any Parent or Subsidiary of the
Company and/or hold outstanding options to purchase such stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of the capital stock of the Company or of any Parent or Subsidiary of the
Company, or (ii) to the extent that his or her rights to purchase stock under
all employee stock purchase plans (as defined in Section 423 of the Code) of the
Company or any Parent or Subsidiary of the Company accrues at a rate, which
exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the
Fair Market Value of the stock at the time such option is granted) for each
calendar year in which such option is outstanding at any time, as determined in
accordance with Section 423 of the Code and the regulations
thereunder.
4.
Offering
Periods
. The Plan will be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after February 1 and August 1 each year, or on such other date as the
Administrator will determine. The Administrator will have the power
to change the duration of Offering Periods (including the commencement dates
thereof) with respect to future Offerings without stockholder approval if such
change is announced prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5.
Participation
. An
Eligible Employee may participate in the Plan by (i) submitting to the Company’s
stock administration office (or its designee), on or before a date determined by
the Administrator prior to an applicable Enrollment Date, a properly completed
subscription agreement authorizing Contributions in the form provided by the
Administrator for such purpose, or (ii) following an electronic or other
enrollment procedure determined by the Administrator.
6.
Contributions
.
(a)
At the
time a Participant enrolls in the Plan pursuant to Section 5, he or she will
elect to have payroll deductions made on each pay day or other Contributions (to
the extent permitted by the Administrator) made during the Offering Period in an
amount not exceeding fifteen percent (15%)
of the Compensation,
which he or she receives on each pay day during the Offering Period; provided,
however, that should a pay day occur on an Exercise Date, a Participant will
have any payroll deductions made on such day applied to his or her account under
the subsequent Offering Period. The Administrator, in its sole
discretion, may permit all Participants in a specified Offering to contribute
amounts to the Plan through payment by cash, check or other means set forth in
the subscription agreement prior to each Exercise Date of each Offering Period,
provided that payment through means other than payroll deductions shall be
permitted only if the Participant has not already had the maximum permitted
amount withheld through payroll deductions during the Offering
Period. A Participant’s subscription agreement will remain in effect
for successive Offering Periods unless terminated as provided in Section 10
hereof.
(b)
Payroll
deductions for a Participant will commence on the first pay day following the
Enrollment Date and will end on the last pay day prior to the Exercise Date of
such Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Section 10 hereof.
(c)
All
Contributions made for a Participant will be credited to his or her account
under the Plan and payroll deductions will be made in whole percentages
only. A Participant may not make any additional payments into such
account.
(d)
A
Participant may discontinue his or her participation in the Plan as provided in
Section
10
, or may increase or decrease
the rate of his or her Contributions during the Offering Period by
(i) properly completing and submitting to the Company’s stock
administration office (or its designee), on or before a date determined by the
Administrator prior to an applicable Exercise Date, a new subscription agreement
authorizing the change in Contribution rate in the form provided by the
Administrator for such purpose, or (ii) following an electronic or other
procedure prescribed by the Administrator. If a Participant has not
followed such procedures to change the rate of Contributions, the rate of his or
her Contributions will continue at the originally elected rate throughout the
Offering Period and future Offering Periods (unless terminated as provided in
Section
10
). The Administrator may, in
its sole discretion, limit the nature and/or number of Contribution rate changes
that may be made by Participants during any Offering Period, and may establish
such other conditions or limitations as it deems appropriate for Plan
administration. Any change in payroll deduction rate made pursuant to
this Section
6(d)
will be effective as of the first
full payroll period following five (5) business days after the date on which the
change is made by the Participant (unless the Administrator, in its sole
discretion, elects to process a given change in payroll deduction rate more
quickly).
(e)
Notwithstanding
the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and Section 3(b), a Participant’s Contributions may be decreased to
zero percent (0%) at any time during an Offering Period. Subject to
Section 423(b)(8) of the Code and Section 3(b) hereof, Contributions will
recommence at the rate originally elected by the Participant effective as of the
beginning of the first Offering Period scheduled to end in the following
calendar year, unless terminated by the Participant as provided in Section
10.
(f)
Notwithstanding
any provisions to the contrary in the Plan, the Administrator may allow Eligible
Employees to participate in the Plan via cash contributions instead of payroll
deductions if (i) payroll deductions are not permitted under applicable local
law, and (ii) the Administrator determines that cash contributions are
permissible under Section 423 of the Code.
(g)
At the
time the option is exercised, in whole or in part, or at the time some or all of
the Common Stock issued under the Plan is disposed of (or any other time that a
taxable event related to the Plan occurs), the Participant must make adequate
provision for the Company’s or Employer’s federal, state, local or any other tax
liability payable to any authority including taxes imposed by jurisdictions
outside of the U.S., national insurance, social security or other tax
withholding obligations, if any, which arise upon the exercise of the option or
the disposition of the Common Stock (or any other time that a taxable event
related to the Plan occurs). At any time, the Company or the Employer
may, but will not be obligated to, withhold from the Participant’s Compensation
the amount necessary for the Company or the Employer to meet applicable
withholding obligations, including any withholding required to make available to
the Company or the Employer any tax deductions or benefits attributable to sale
or early disposition of Common Stock by the Eligible Employee. In addition, the
Company or the Employer may, but will not be obligated to, withhold from the
proceeds of the sale of Common Stock or any other method of withholding the
Company or the Employer deems appropriate to the extent permitted by U.S.
Treasury Regulation Section 1.423-2(f).
7.
Grant of
Option
. On the Enrollment Date of each Offering Period, each
Eligible Employee participating in such Offering Period will be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of Common Stock determined
by dividing such Eligible Employee’s Contributions accumulated prior to such
Exercise Date and retained in the Eligible Employee’s account as of the Exercise
Date by the applicable Purchase Price; provided that in
no event
will an Eligible Employee be permitted to purchase during each Offering Period
more than 25,000 shares of the Company’s Common Stock
(subject to: (i)
the limitations set forth in Section 3(b), (ii) the limitations set forth in
Section 13 and (iii) any adjustment pursuant to Section 19). The
Eligible Employee may accept the grant of such option with respect to an
Offering Period by electing to participate in the Plan in accordance with the
requirements of Section 5. The Administrator may, for future Offering
Periods, increase or decrease, in its absolute discretion, the maximum number of
shares of Common Stock that an Eligible Employee may purchase during each
Offering Period. Exercise of the option will occur as provided in
Section 8, unless the Participant has withdrawn pursuant to Section
10. The option will expire on the last day of the Offering
Period.
8.
Exercise of
Option
.
(a)
Unless a
Participant withdraws from the Plan as provided in Section
10
, his or her option for the purchase of shares of
Common Stock will be exercised automatically on the Exercise Date, and the
maximum number of full shares subject to the option will be purchased for such
Participant at the applicable Purchase Price with the accumulated Contributions
from his or her account. No fractional shares of Common Stock will be
purchased; any Contributions accumulated in a Participant’s account, which are
not sufficient to purchase a full share will be retained in the Participant’s
account for the subsequent Offering Period, subject to earlier withdrawal by the
Participant as provided in Section
10
. Any other funds left over in a
Participant’s account after the Exercise Date will be returned to the
Participant. During a Participant’s lifetime, a Participant’s option
to purchase shares hereunder is exercisable only by him or her.
(b)
If the
Administrator determines that, on a given Exercise Date, the number of shares of
Common Stock with respect to which options are to be exercised may exceed (i)
the number of shares of Common Stock that were available for sale under the Plan
on the Enrollment Date of the applicable Offering Period, or (ii) the number of
shares of Common Stock available for sale under the Plan on such Exercise Date,
the Administrator may in its sole discretion (x) provide that the Company will
make a pro rata allocation of the shares of Common Stock available for purchase
on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner
as will be practicable and as it will determine in its sole discretion to be
equitable among all Participants exercising options to purchase Common Stock on
such Exercise Date, and continue all Offering Periods then in effect or (y)
provide that the Company will make a pro rata allocation of the shares available
for purchase on such Enrollment Date or Exercise Date, as applicable, in as
uniform a manner as will be practicable and as it will determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20. The Company may make a pro
rata allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company’s
stockholders subsequent to such Enrollment Date.
9.
Delivery
. As
soon as reasonably practicable after each Exercise Date on which a purchase of
shares of Common Stock occurs, the Company will arrange the delivery to each
Participant the shares purchased upon exercise of his or her option in a form
determined by the Administrator (in its sole discretion) and pursuant to rules
established by the Administrator. The Company may permit or require
that shares be deposited directly with a broker designated by the Company or to
a designated agent of the Company, and the Company may utilize electronic or
automated methods of share transfer. The Company may require that
shares be retained with such broker or agent for a designated period of time
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares. No Participant will have any voting,
dividend, or other stockholder rights with respect to shares of Common Stock
subject to any option granted under the Plan until such shares have been
purchased and delivered to the Participant as provided in this Section
9.
10.
Withdrawal
.
(a)
A
Participant may withdraw all but not less than all the Contributions credited to
his or her account and not yet used to exercise his or her option under the Plan
at any time by (i) submitting to the Company’s stock administration office
(or its designee) a written notice of withdrawal in the form determined by the
Administrator for such purpose, or (ii) following an electronic or other
withdrawal procedure determined by the Administrator. All of the
Participant’s Contributions credited to his or her account will be paid to such
Participant promptly after receipt of notice of withdrawal and such
Participant’s option for the Offering Period will be automatically terminated,
and no further Contributions for the purchase of shares will be made for such
Offering Period. If a Participant withdraws from an Offering Period,
Contributions will not resume at the beginning of the succeeding Offering
Period, unless the Participant re-enrolls in the Plan in accordance with the
provisions of Section 5.
(b)
A
Participant’s withdrawal from an Offering Period will not have any effect upon
his or her eligibility to participate in any similar plan that may hereafter be
adopted by the Company or in succeeding Offering Periods that commence after the
termination of the Offering Period from which the Participant
withdraws.
11.
Termination of
Employment
. Upon a Participant’s ceasing to be an Eligible
Employee, for any reason, he or she will be deemed to have elected to withdraw
from the Plan and the Contributions credited to such Participant’s account
during the Offering Period but not yet used to purchase shares of Common Stock
under the Plan will be returned to such Participant or, in the case of his or
her death, to the person or persons entitled thereto under Section 15, and such
Participant’s option will be automatically terminated.
12.
Interest
. No
interest will accrue on the Contributions of a participant in the Plan, except
as may be required by applicable law, as determined by the Company, and if so
required by the laws of a particular jurisdiction, shall apply to all
Participants in the relevant Offering except to the extent otherwise permitted
by U.S. Treasury Regulation Section 1.423-2(f).
13.
Stock
.
(a)
Subject
to adjustment upon changes in capitalization of the Company as provided in
Section 19 hereof, the maximum number of shares of Common Stock that will be
made available for sale under the Plan will be 1,148,660 shares of Common
Stock.
(b)
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), a Participant will only have
the rights of an unsecured creditor with respect to such shares
, and no
right to vote or receive dividends or any other rights as a stockholder will
exist with respect to such shares.
(c)
Shares of
Common Stock to be delivered to a Participant under the Plan will be registered
in the name of the Participant or in the name of the Participant and his or her
spouse.
14.
Administration
. The
Plan will be administered by the Board or a Committee appointed by the Board,
which Committee will be constituted to comply with Applicable
Laws. The Administrator will have full and exclusive discretionary
authority to construe, interpret and apply the terms of the Plan, to designate
separate Offerings under the Plan, to determine eligibility, to adjudicate all
disputed claims filed under the Plan and to establish such procedures that it
deems necessary for the administration of the Plan (including, without
limitation, to adopt such procedures and sub-plans as are necessary or
appropriate to permit the participation in the Plan by employees who are foreign
nationals or employed outside the U.S.). Unless otherwise determined
by the Administrator, the Employees eligible to participate in each sub-plan
will participate in a separate Offering. Without limiting the
generality of the foregoing, the Administrator is specifically authorized to
adopt rules and procedures regarding eligibility to participate, the definition
of Compensation, handling of Contributions, making of Contributions to the Plan
(including, without limitation, in forms other than payroll deductions),
establishment of bank or trust accounts to hold Contributions, payment of
interest, conversion of local currency, obligations to pay payroll tax,
determination of beneficiary designation requirements, withholding procedures
and handling of stock certificates that vary with applicable local
requirements. Every finding, decision and determination made by the
Administrator will, to the full extent permitted by law, be final and binding
upon all parties.
15.
Designation of
Beneficiary
.
(a)
If
permitted by the Administrator, a Participant may file a designation of a
beneficiary who is to receive any shares of Common Stock 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,
if permitted by the Administrator, a Participant may file a 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 will be required for such designation to be
effective.
(b)
Such
designation of beneficiary may be changed by the Participant at any time by
notice in a form determined by the Administrator. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant’s death, the
Company will deliver such shares and/or cash to the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such shares and/or cash to the spouse or to any one or more dependents
or relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may
designate.
(c)
All
beneficiary designations will be in such form and manner as the Administrator
may designate from time to time. Notwithstanding Sections 15(a) and
(b) above, the Company and/or the Administrator may decide not to permit such
designations by Participants in non-U.S. jurisdictions to the extent permitted
by U.S. Treasury Regulation Section 1.423-2(f).
16.
Transferability
. Neither
Contributions credited to a Participant’s account nor any rights with regard to
the exercise of an option or to receive shares of Common Stock under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way (other
than by will, the laws of descent and distribution or as provided in Section 15
hereof) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition will be without effect, except that the Company may
treat such act as an election to withdraw funds from an Offering Period in
accordance with Section 10 hereof.
17.
Use of
Funds
. The Company may use all Contributions received or held
by it under the Plan for any corporate purpose, and the Company will not be
obligated to segregate such Contributions except under Offerings in which
applicable local law requires that Contributions to the Plan by Participants be
segregated from the Company’s general corporate funds and/or deposited with an
independent third party for Participants in non-U.S.
jurisdictions. Until shares of Common Stock are issued, Participants
will only have the rights of an unsecured creditor with respect to such
shares.
18.
Reports
. Individual
accounts will be maintained for each Participant in the
Plan. Statements of account will be given to participating Eligible
Employees at least annually, which statements will set forth the amounts of
Contributions, the Purchase Price, the number of shares of Common Stock
purchased and the remaining cash balance, if any.
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19.
|
Adjustments,
Dissolution, Liquidation, Merger or Change in
Control
.
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(a)
Adjustments
. In
the event that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Common Stock or other
securities of the Company, or other change in the corporate structure of the
Company affecting the Common Stock occurs, the Administrator, in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, will, in such manner as it may deem
equitable, adjust the number and class of Common Stock that may be delivered
under the Plan, the Purchase Price per share and the number of shares of Common
Stock covered by each option under the Plan that has not yet been exercised, and
the numerical limits of Sections 7 and 13.
(b)
Dissolution or
Liquidation
. In the event of the proposed dissolution or
liquidation of the Company, any Offering Period then in progress will be
shortened by setting a New Exercise Date, and will terminate immediately prior
to the consummation of such proposed dissolution or liquidation, unless provided
otherwise by the Administrator. The New Exercise Date will be before
the date of the Company’s proposed dissolution or liquidation. The
Administrator will notify each Participant in writing or electronically, prior
to the New Exercise Date, that the Exercise Date for the Participant’s option
has been changed to the New Exercise Date and that the Participant’s option will
be exercised automatically on the New Exercise Date, unless prior to such date
the Participant has withdrawn from the Offering Period as provided in Section 10
hereof.
(c)
Merger or Change in
Control
. In the event of a merger or Change in Control, each
outstanding option will be assumed or an equivalent option 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, the Offering Period with respect to which
such option relates will be shortened by setting a New Exercise Date on which
such Offering Period shall end. The New Exercise Date will occur
before the date of the Company’s proposed merger or Change in
Control. The Administrator will notify each Participant in writing or
electronically prior to the New Exercise Date, that the Exercise Date for the
Participant’s option has been changed to the New Exercise Date and that the
Participant’s option will be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
20.
Amendment or
Termination
.
(a)
The
Administrator, in its sole discretion, may amend, suspend, or terminate the
Plan, or any part thereof, at any time and for any reason. If the
Plan is terminated, the Administrator, in its discretion, may elect to terminate
all outstanding Offering Periods either immediately or upon completion of the
purchase of shares of Common Stock on the next Exercise Date (which may be
sooner than originally scheduled, if determined by the Administrator in its
discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to Section
19). If the Offering Periods are terminated prior to expiration, all
amounts then credited to Participants
’
accounts that have not been
used to purchase shares of Common Stock will be returned to the Participants
(without interest thereon, except as otherwise required under local laws, as
further set forth in Section 12 hereof) as soon as administratively
practicable.
(b)
Without
stockholder consent and without limiting Section 20(a), the Administrator will
be entitled to change the Offering Periods, designate separate Offerings, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a Participant in order to adjust for delays or mistakes in
the Company’s processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each Participant properly correspond with Contribution amounts, and
establish such other limitations or procedures as the Administrator determines
in its sole discretion advisable that are consistent with the Plan.
(c)
In the
event the Administrator determines that the ongoing operation of the Plan may
result in unfavorable financial accounting consequences, the Administrator may,
in its discretion and, to the extent necessary or desirable, modify, amend or
terminate the Plan to reduce or eliminate such accounting consequence including,
but not limited to:
(i)
amending
the Plan to conform with the safe harbor definition under Statement of Financial
Accounting Standards Codification Topic 718 (or any successor thereto),
including with respect to an Offering Period underway at the time;
(ii)
altering
the Purchase Price for any Offering Period including an Offering Period underway
at the time of the change in Purchase Price;
(iii)
shortening
any Offering Period by setting a New Exercise Date, including an Offering Period
underway at the time of the
Administrator
action;
(iv)
reducing
the maximum percentage of Compensation a Participant may elect to set aside as
Contributions; and
(v)
reducing
the maximum number of Shares a Participant may purchase during any Offering
Period.
Such
modifications or amendments will not require stockholder approval or the consent
of any Plan Participants.
21.
Notices
. All
notices or other communications by a Participant to the Company under or in
connection with the Plan will be deemed to have been duly given when received in
the form and manner specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
22.
Conditions Upon Issuance of
Shares
. Shares of Common Stock will not be issued with respect
to an option unless the exercise of such option and the issuance and delivery of
such shares pursuant thereto will comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and will be further subject to the approval of counsel for the Company
with respect to such compliance.
As a
condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
applicable provisions of law.
23.
Code Section
409A.
The Plan is exempt from the application of Code Section
409A and any ambiguities herein will be interpreted to so be exempt from Code
Section 409A. In furtherance of the foregoing and notwithstanding any
provision in the Plan to the contrary, if the Administrator determines that an
option granted under the Plan may be subject to Code Section 409A or that any
provision in the Plan would cause an option under the Plan to be subject to Code
Section 409A, the Administrator may amend the terms of the Plan and/or of an
outstanding option granted under the Plan, or take such other action the
Administrator determines is necessary or appropriate, in each case, without the
Participant’s consent, to exempt any outstanding option or future option that
may be granted under the Plan from or to allow any such options to comply with
Code Section 409A, but only to the extent any such amendments or action by the
Administrator would not violate Code Section 409A. Notwithstanding
the foregoing, the Company shall have no liability to a Participant or any other
party if the option to purchase Common Stock under the Plan that is intended to
be exempt from or compliant with Code Section 409A is not so exempt or compliant
or for any action taken by the Administrator with respect
thereto. The Company makes no representation that the option to
purchase Common Stock under the Plan is compliant with Code Section
409A.
24.
Stockholder
Approval
. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval will be obtained in
the manner and to the degree required under Applicable Laws.
25.
Term of
Plan
. The Plan will become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the
Company. It will continue in effect for a term of ten (10) years,
unless sooner terminated under Section 20.
26.
Governing Law
. The
Plan shall be governed by, and construed in accordance with, the laws of the
State of California (except its choice-of-law provisions).
27.
Severability
. If
any provision of the Plan is or becomes or is deemed to be invalid, illegal, or
unenforceable for any reason in any jurisdiction or as to any Participant, such
invalidity, illegality or unenforceability shall not affect the remaining parts
of the Plan, and the Plan shall be construed and enforced as to such
jurisdiction or Participant as if the invalid, illegal or unenforceable
provision had not been included.
Exhibit
A
Audit
Committee Charter
CHARTER
FOR
THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
OF
AVISTAR
COMMUNICATIONS CORPORATION
(As
amended and restated April [__], 2010)
PURPOSE:
The
purpose of the Audit Committee of the Board of Directors of Avistar
Communications Corporation (the “
Company
”) shall be
to:
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·
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Oversee
the accounting and financial reporting processes of the Company and audits
of the financial statements of the
Company;
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|
·
|
Assist
the Board in oversight and monitoring of (i) the integrity of the
Company’s financial statements, (ii) the Company’s compliance with
legal and regulatory requirements, (iii) the independent auditor’s
qualifications, independence and performance, and (iv) the Company’s
internal accounting and financial
controls;
|
|
·
|
Prepare
the report that the rules of the Securities and Exchange Commission (the
“
SEC
”) require be
included in the Company’s annual proxy
statement;
|
|
·
|
Provide
the Company’s Board with the results of its monitoring and recommendations
derived therefrom; and
|
|
·
|
Provide
to the Board such additional information and materials as it may deem
necessary to make the Board aware of significant financial matters that
require the attention of the Board.
|
In
addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
SCOPE
& POLICY:
Management
is responsible for preparing the Company’s financial statements, and the
independent auditors are responsible for auditing those financial
statements. The Audit Committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The Audit Committee
should take the appropriate actions to set the overall corporate “tone” for
quality financial reporting, sound business risk practices and ethical
behavior. The Audit Committee shall have a clear understanding with
management and the independent auditors that the independent auditors are
ultimately accountable to the board and the Audit Committee, as representatives
of the Company’s stockholders. The Audit Committee shall have the
ultimate authority and responsibility to evaluate and, where appropriate,
replace the independent auditors.
MEMBERSHIP:
The
Audit Committee members will be appointed by, and will serve at the discretion
of, the Board of Directors. The Audit Committee will consist of at
least two members of the Board of Directors. Members of the Audit
Committee must meet the following criteria (as well as any criteria required by
the SEC):
|
·
|
Each
member will be an independent director, as defined in (i) Section
10A(m) of the Securities Exchange Act of 1934, as amended, and (ii)
Section 301 of the Sarbanes-Oxley Act of
2002;
|
|
·
|
Each
member will be able to read and understand fundamental financial
statements, including a company’s balance sheet, income statement and cash
flow statement; and
|
|
·
|
At
least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background, including a current or past position
as a principal financial officer or other senior officer with financial
oversight responsibilities.
|
RESPONSIBILITIES:
The
responsibilities of the Audit Committee shall include:
|
·
|
Reviewing
on a continuing basis the adequacy of the Company’s system of internal
controls, including meeting periodically with the Company’s management and
the independent auditors to review the adequacy of such controls and to
review before release the disclosure regarding such system of internal
controls required under SEC rules to be contained in the Company’s
periodic filings and the attestations or reports by the independent
auditors relating to such
disclosure;
|
|
·
|
Appointing,
compensating, determining funding for and overseeing the work of the
independent auditors (including resolving disagreements between management
and the independent auditors regarding financial reporting) as set forth
in Section 301 of the Sarbanes-Oxley Act for the purpose of preparing or
issuing an audit report or related
work;
|
|
·
|
Pre-approving
audit and permissible non-audit services provided to the Company by the
independent auditors (or subsequently approving non-audit services in
those circumstances where a subsequent approval is necessary and
permissible) as set forth in Section 202 of the Sarbanes-Oxley Act; in
this regard, the Audit Committee shall have the sole authority to approve
the hiring and firing of the independent auditors, all audit engagement
fees and terms and all non-audit engagements, as may be permissible, with
the independent auditors;
|
|
·
|
Reviewing
and providing guidance with respect to the external audit and the
Company’s relationship with its independent auditors by (i) reviewing
the independent auditors’ proposed audit scope, approach and independence;
(ii) obtaining on a periodic basis a statement from the independent
auditors regarding relationships and services with the Company which may
impact independence and presenting this statement to the Board of
Directors, and to the extent there are relationships, monitoring and
investigating them; (iii) reviewing the independent auditors’ peer
review conducted every three years; (iv) discussing with the
Company’s independent auditors the financial statements and audit
findings, including any significant adjustments, management judgments and
accounting estimates, significant new accounting policies and
disagreements with management and any other matters described in SAS No.
61, as may be modified or supplemented; and (v) reviewing reports
submitted to the audit committee by the independent auditors in accordance
with the applicable SEC
requirements;
|
|
·
|
Reviewing
and discussing with management and the independent auditors the annual
audited financial statements and quarterly unaudited financial statements,
including the Company’s disclosures under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” prior to
filing the Company’s Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q, respectively, with the
SEC;
|
|
·
|
Directing
the Company’s independent auditors to review before filing with the SEC
the Company’s interim financial statements included in Quarterly Reports
on Form 10-Q, using professional standards and procedures for conducting
such reviews;
|
|
·
|
Conducting
a post-audit review of the financial statements and audit findings,
including any significant suggestions for improvements provided to
management by the independent
auditors;
|
|
·
|
Reviewing
before release the unaudited quarterly operating results in the Company’s
quarterly earnings release;
|
|
·
|
Overseeing
compliance with the requirements of the SEC for disclosure of auditor’s
services and audit committee members, member qualifications and
activities;
|
|
·
|
Reviewing,
in conjunction with counsel, any legal matters that could have a
significant impact on the Company’s financial
statements;
|
|
·
|
Providing
oversight and review at least annually of the Company’s risk management
policies, including its investment
policies;
|
|
·
|
Reviewing
the Company’s compliance with employee benefit
plans;
|
|
·
|
If
necessary, instituting special investigations with full access to all
books, records, facilities and personnel of the
Company;
|
|
·
|
As
appropriate, engaging, obtaining advice and assistance from and determine
funding for outside legal, accounting or other advisors as set forth in
Section 301 of the Sarbanes-Oxley
Act;
|
|
·
|
Reviewing
and approving in advance any proposed related party
transactions;
|
|
·
|
Reviewing
its own charter, structure, processes and membership
requirements;
|
|
·
|
Providing
a report in the Company’s proxy statement in accordance with the rules and
regulations of the SEC; and
|
|
·
|
Establishing
procedures for receiving, retaining and treating complaints received by
the Company regarding accounting, internal accounting controls or auditing
matters and procedures for the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing
matters.
|
MEETINGS:
The Audit
Committee will meet at least four times each year and approve (remotely, in
person or by teleconference) SEC filings at least four times each year. The
Audit Committee may establish its own schedule, which it will provide to the
Board of Directors in advance.
The Audit
Committee will meet separately with the Chief Executive Officer and separately
with the Chief Financial Officer of the Company at such times as are appropriate
to review the financial affairs of the Company. The Audit Committee
will meet separately with the independent auditors of the Company, at such times
as it deems appropriate, but not less than quarterly, to fulfill the
responsibilities of the Audit Committee under this charter.
MINUTES:
The Audit
Committee will maintain written minutes of its meetings, which minutes will be
filed with the minutes of the meetings of the Board of Directors.
REPORTS:
In
addition to preparing the report in the Company’s proxy statement in accordance
with the rules and regulations of the SEC, the Audit Committee will summarize
its examinations and recommendations to the Board of Directors as may be
appropriate, consistent with the Committee’s charter.
COMPENSATION:
Members
of the Audit Committee shall receive such fees, if any, for their service as
Audit Committee members as may be determined by the Board of Directors in its
sole discretion. Such fees may include retainers or per meeting
fees. Fees may be paid in such form of consideration as is determined
by the Board of Directors.
Members
of the Audit Committee may not receive any compensation from the Company except
the fees that they receive for service as a member of the Board of Directors or
any committee thereof.
DELEGATION
OF AUTHORITY:
The Audit
Committee may delegate to one or more designated members of the Audit Committee
the authority to pre-approve audit and permissible non-audit services, provided
such pre-approval decision is presented to the full Audit Committee at its
scheduled meetings.
Exhibit
B
Nominating
Committee Charter
AVISTAR
COMMUNICATIONS CORPORATION
a
Delaware corporation
CHARTER
OF THE NOMINATING COMMITTEE
OF
THE BOARD OF DIRECTORS
(As
adopted by the Board of Directors on April [__], 2010)
PURPOSE:
The
Nominating Committee (the “
Committee
”) of the
Board of Directors (the “
Board
”) of Avistar
Communications Corporation, a Delaware corporation (the “
Company
”), will
assist the Company in meeting applicable governance standards by monitoring the
composition of the Board and, when appropriate, seeking, screening and
recommending for nomination qualified candidates for election to the Board at
the Company’s Annual Meeting of Stockholders. In addition, the
Committee will seek qualified candidates to fill vacancies on the Board subject
to appointment by the Board. The Committee will evaluate candidates
identified on its own initiative, including incumbent directors, as well as
candidates referred to it by other members of the Board, by the Company’s
management, by stockholders who submit names to the Company’s corporate
secretary for referral to the Committee in accordance with the Bylaws of the
Company, or by other external sources. The Committee will also
evaluate the Board’s structure and practices and, when appropriate, recommend
new policies to the full Board.
MEMBERSHIP:
The
Committee will consist of a minimum of two (2) members of the
Board.
RESPONSIBILITIES
AND AUTHORITY:
The
responsibilities and authority of the Committee shall include the
following:
|
·
|
Review
Board and Board committee structure, composition, practices and future
requirements, and make recommendations on these matters to the
Board.
|
|
·
|
Oversee
the Board performance evaluation process including conducting surveys of
director observations, suggestions and preferences, and review the
performance and self-evaluation of each
director.
|
|
·
|
As
needed or appropriate, conduct or authorize searches for potential Board
members.
|
|
·
|
Evaluate,
propose and approve nominees for election or appointment to the
Board.
|
|
·
|
Consider,
evaluate and, as applicable, propose and approve, security holder nominees
for election to the Board.
|
|
·
|
In
performing its responsibilities, the Committee shall have the authority to
retain, compensate and terminate any search firm to be used to identify
director candidates.
|
|
·
|
Evaluate
and make recommendations to the Board concerning the appointment of
directors to Board committees and the selection of Board committee
chairs.
|
|
·
|
Evaluate
and recommend termination of membership of individual directors in
accordance with the Board’s governance principles, for cause or for other
appropriate reasons.
|
|
·
|
Oversee,
and implement as necessary, director continuing education programs,
including complying with any applicable director continuing education
requirements.
|
|
·
|
Consider
and/or adopt a policy regarding the consideration of candidates for the
Board recommended by security holders, including, if adopted, procedures
to be followed by security holders in submitting
recommendations.
|
|
·
|
Periodically
determine, as appropriate, whether there are any specific, minimum
qualifications that the Committee believes must be met by a nominee
approved by the Committee for a position on the Board and whether there
are any specific qualities or skills that the Committee believes are
necessary for one or more directors to
possess.
|
|
·
|
The
Committee shall review the disclosure in the Company’s proxy statement for
its annual meeting of stockholders and shall inform management whether
there are any changes that are necessary or appropriate with respect to
disclosure in the proxy statement regarding: (i) the
Committee’s process for identifying and evaluating nominees for director,
including nominees recommended by security holders; (ii) any minimum
qualifications that the Committee believes must be met by nominees
recommended by the Committee; (iii) any specific qualities or skills that
the Committee believes are necessary for one or more of the Company’s
directors to possess; (iv) the procedures to be followed by security
holders in submitting director recommendations; and (v) the policy of the
Committee with regard to the consideration of director candidates
recommended by security holders.
|
|
·
|
Review
and re-examine this Charter annually and make recommendations to the Board
for any proposed changes.
|
|
·
|
Annually
review and evaluate the Committee’s own
performance.
|
|
·
|
Form
and delegate authority to subcommittees when appropriate;
provided
,
however
, that
any such subcommittee member must be a member of the
Committee.
|
|
·
|
Perform
such other tasks as may be delegated to the Committee from time to time by
the Board.
|
|
·
|
In
performing its responsibilities hereunder, the Committee shall have the
authority to obtain advice, reports or opinions from such internal or
external counsel and expert advisors as the Committee shall deem necessary
or advisable.
|
The
Committee shall not be required to address each responsibility set forth above
at each meeting of the Committee, but rather shall take such actions at such
times as are reasonably necessary to carry out the responsibilities set forth
herein.
MEETINGS:
Meetings
of the Committee will be held at the pleasure of the Board and the members of
the Committee, from time to time, in response to needs of the
Board. Notwithstanding the foregoing, the Committee will meet at
least once annually to evaluate and make nominations of qualified candidates for
election to the Board at the Annual Meeting of Stockholders.
MINUTES:
The
Committee will maintain written minutes of its meetings, which minutes will be
filed with the minutes of the meetings of the Board.
REPORTS:
The
Committee will summarize its examinations and recommendations to the Board as
appropriate, consistent with the Committee’s charter.
The
Committee will provide written reports to the Board regarding the Committee’s
nominations for election to the Board.
COMPENSATION:
Members
of the Committee shall receive such fees for their service as Committee members
as may be determined by the Board in its sole discretion. Such fees
may include retainers or per meeting fees. Fees may be paid in such
form of consideration as is determined by the Board. Changes in such
compensation shall be determined by the Board in its sole
discretion.
No
members of the Committee may receive any compensation from the Company other
than the fees that they receive for service as a member of the Board or any
committee.
DETACH
HERE
PROXY
AVISTAR
COMMUNICATIONS CORPORATION
2010
ANNUAL MEETING OF STOCKHOLDERS
JUNE
10, 2010 10:00 A.M.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
stockholder(s) herby appoint(s) Gerald J. Burnett and William L. Campbell each
as proxy and attorney-in-fact with the power to appoint (his/her) substitute,
and hereby authorizes them to represent and to vote, as designated on the
reverse side of this ballot, all of the shares of common stock of AVISTAR
COMMUNICATIONS CORPORATION that the stockholder(s) is/are entitled to vote at
the Annual Meeting of Stockholders to be held at 10:00 AM, PDT on June 10, 2010,
at 1875 S. Grant Street, 10th Floor San Mateo, California 94402, and any
adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed
herein. If no such direction is made, this proxy will be voted in
accordance with the Board of Directors' recommendations.
Address Change/ comments:
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
DETACH
AND RETURN THIS PORTION ONLY
THE PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED
The Board of Directors recommends that you vote FOR the following:
|
1.
|
Election
of Directors. NOMINEES:
|
|
|
(01) Gerald J.
Burnett, (02) William L. Campbell, (03) Craig F.
Heimark, (04) R. Stephen Heinrichs,
|
|
|
(05) Robert M.
Metcalfe, and (06) Robert F. Kirk.
For All [ ] Withhold All
[ ] For All Except [ ]
To
withhold authority to vote for any individual nominee(s), mark “For All
Except” and write the number(s) of the nominee(s) on the line
below
----------------------------------------------------------------------------------------------
|
The Board of Directors recommends that you vote FOR the
following:
|
2.To
approve the amendment and restatement of the Company’s
bylaws.
|
For
[ ]
|
Against
[ ]
|
Abstain
[ ]
|
|
3.To
approve the 2010 Employee Stock Purchase Plan.
|
For
[ ]
|
Against
[ ]
|
Abstain
[ ]
|
|
4.To
approve a stock option exchange program pursuant to which eligible holders
of stock options will be offered the opportunity to exchange their
eligible options to purchase shares of common stock outstanding under the
Company’s existing equity incentive plans, for a smaller number of new
options at a lower exercise price.
|
For
[ ]
|
Against
[ ]
|
Abstain
[ ]
|
|
5.To
ratify the appointment of Burr Pilger Mayer, Inc. as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2010.
|
For
[ ]
|
Against
[ ]
|
Abstain
[ ]
|
|
|
|
|
|
Note: In
their discretion, the proxies are authorized to cumulate votes for the election
of directors and to vote upon such other business as may properly come before
the meeting or any adjournments thereof.
For
address change/comments, mark here (see reverse for
instructions) [ ]
Please
indicate if you plan to attend this meeting
Yes [ ]
No [ ]
Please
sign exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership name,
by authorized officer.
Signature:
Date:
Signature:
Date: