SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
JUNGLE STREET, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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Preliminary Copy
JUNGLE STREET, INC.
Notice of Special Meeting of Shareholders
October 23, 1996
To the Shareholders of Jungle Street, Inc.:
A Special Meeting of Shareholders of Jungle Street, Inc., a Utah
corporation (the "Company"), will be held at 10:00 a.m., Pacific Time, on
October 23, 1996 at the Red Lion Inn, 1225 Wenatchee Avenue, Wenatchee,
Washington, for the following purposes:
1. To consider and approve a merger of the Company with and into its
wholly owned subsidiary Televar, Inc., a Washington corporation,
that would result in (i) a change in the Company's name and state
of incorporation; (ii) a one-for-two-and-one-half reverse split
of the Company's common stock, and (iii) certain changes to the
Company's charter documents;
2. To consider and approve the Company's 1996 Stock Incentive Plan;
and
3. To transact any other business that properly comes before the
Special Meeting.
Only shareholders of record at the close of business on September __,
1996 will be entitled to vote at the Special Meeting.
You are requested to date and sign the enclosed proxy and return it in
the enclosed postage-prepaid envelope. You may attend the meeting in person
even if you send in your proxy; you need not keep the proxy for admission
to or identification at the meeting.
By Order of the Board of Directors
September __, 1996 Charles D. DeJong
Wenatchee, Washington Chairman of the Board and Chief Executive Officer
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL
MEETING IN PERSON, PLEASE SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE SO THAT YOUR SHARES WILL BE VOTED. THE ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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JUNGLE STREET, INC.
PROXY STATEMENT
Special Meeting of Shareholders
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The mailing address of the principal executive offices of the Company
is 215 Yakima Street, Wenatchee, Washington 98801. The approximate date
this proxy statement and the accompanying proxy form are first being sent
to shareholders is September __, 1996.
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
Jungle Street, Inc., a Utah corporation, for use at the Special Meeting of
Shareholders to be held on October 23, 1996 and at any adjournment thereof.
The Company will pay the cost of preparing and mailing the proxy, proxy
statement, and any other material given to shareholders by the Company in
connection with the Special Meeting. Proxies will be solicited by use of
the mails, and officers of the Company may also solicit proxies by
telephone or personal contact. Copies of solicitation materials will be
furnished to fiduciaries, custodians, and brokerage houses for forwarding
to beneficial owners of the stock held in their names.
Any person giving a proxy in the form accompanying this proxy
statement has the power to revoke it at any time before its exercise. The
proxy may be revoked by filing with the Company, attention Nick A. Gerde,
Secretary, an instrument of revocation or a duly executed proxy bearing a
later date. The proxy may also be revoked by voting in person at the
meeting. A shareholder who attends the meeting, however, is not required to
revoke the proxy and vote in person. All valid, unrevoked proxies will be
voted at the Special Meeting in accordance with the instructions given.
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VOTING SECURITIES
The Company's Common Stock, $.001 par value (the "Common Stock") is
the only outstanding authorized voting security of the Company. The record
date for determining holders of Common Stock entitled to vote at the
Special Meeting is September __, 1996. On that date there were 13,968,625
shares of Common Stock outstanding, entitled to one vote per share.
Change in Control of the Company
On August 30, 1996, the Company effected a merger between its wholly
owned subsidiary, Jungle Street, Inc., a newly formed Washington
corporation, and Televar Northwest, Inc., a Washington corporation
("Televar"). As a result of this merger, the Company acquired Televar as an
operating subsidiary, and the shareholders of Televar acquired 83% of the
shares of the Company's common stock outstanding on the date of the merger.
Security Ownership of Principal Shareholders and Management
The following table sets forth certain information regarding the
beneficial ownership as of September __, 1996 of the Common Stock by
(i) each person known by the Company to own beneficially more than five
percent of the Common Stock, (ii) each director of the Company,
(iii) certain executives officers of the Company, and (iv) all executive
officers and directors as a group. Except as otherwise noted, the persons
listed below have sole investment and voting power with respect to the
Common Stock owned by them.
Number of Shares Percent
Beneficial Owner Beneficially Owned of Class
Charles D. DeJong ............................... 2,134,375 15.3
1934 Maiden Lane
Wenatchee, Washington
Mark Hamilton ................................... 2,134,375 15.3
215 Yakima Street
Wenatchee, Washington
Donald Wright ................................... 2,575,000 18.4
150 Manhattan Square
East Wenatchee, Washington
Nick A. Gerde ................................... 1,125,000 8.0
1906 Rocklund Drive
Wenatchee, Washington
Donald B. Cotton ................................ 375,000 2.7
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538 Timber Ridge Drive
Trophy Club, Texas
Roger P. Vallo .................................. 375,000 2.7
12821 127th Avenue SE
Snohomish, Washington
Robert A. Schwiesow ............................. 950,000 6.8
200 Airport Way
East Wenatchee, Washington
Allen Dahl ...................................... 718,325 5.1
7300 Madrona Drive
N.E. Bainbridge Island, Washington
Jenson Services, Inc. ........................... 1,125,000 8.1
1787 E. Fort 106 Union #106
Salt Lake City, Utah
All directors and officers as a group (6 persons) 8,718,750 62.4
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term compensation
of Charles D. DeJong, the Company's Chief Executive Officer, paid by the
Company's operating subsidiary, Televar, for services in all capacities for
the last three fiscal years. No officer of the Company received annual
salary and bonuses exceeding $100,000 in the fiscal year ended June 30,
1996.
Annual Compensation
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All Other
Name and Salary Bonus Compensation
Principal Position Fiscal Year(1) ($) ($) ($)
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Charles D. DeJong 1996 19,086.42 0 0
CEO 1995 10,337.41 0 0
1994 10,153.86 0 0
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Stock Options
No grants of stock options or other similar rights have been made by
the Company or Televar to Mr. DeJong.
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PROPOSAL 1: APPROVAL OF MERGER
For the reasons set forth below, the Board of Directors believes that
the best interests of the Company and its shareholders will be served by
merging the Company with and into its wholly owned subsidiary Televar (the
"Merger"). At the time of the Merger, each outstanding share of the
Company's common stock will be converted into two-fifths of a share of
common stock of Televar and the Articles of Incorporation and Bylaws of
Televar will be the Articles of Incorporation and Bylaws of the surviving
corporation. As a result of the Merger, "Televar, Inc." will be the name of
the surviving corporation; the state of incorporation of the surviving
corporation will be Washington rather than Utah; and certain changes to the
Articles of Incorporation and Bylaws of the surviving corporation will be
effected. The Board of Directors has unanimously approved the Merger. At
the Special Meeting, the shareholders will be asked to approve the Merger.
A vote of a majority of all outstanding shares of Common Stock is required
for approval.
Principal Reasons for the Merger
The Company's principal executive office is in Washington, its
operating subsidiary, Televar, is a Washington corporation, and the
operations and employees of Televar are based in Washington. The Company
has no offices, property, employees, or operations in Utah.
The Company is now governed by Utah corporate law, but its operating
subsidiary is governed by Washington corporate law and is subject to other
Washington laws applicable to businesses operating in Washington. The
principal reason for the Merger is to have all of the Company's business
and operations governed by the corporate laws of only Washington. The
Merger will render inapplicable the Utah Business Corporation Act (the
"UBCA"). After the Merger, the surviving corporation will be governed by
the Washington Business Corporation Act (the "WBCA"). See "Certain
Differences in Washington and Utah Corporate Law."
The Company has been exploring avenues of financing that would be
enhanced if the per share value of its stock were increased. Accordingly,
the Merger, by means of a one-for-two-and-one-half exchange ratio, would
effect a reverse split of the Company's common stock in that ratio.
The Articles of Incorporation of the Company now in effect are those
filed on its formation in 1980 to govern its former operations in Utah real
estate investment. The Company has since spent a substantial period as an
inactive public corporation until it acquired the assets of Televar on
August 30, 1996. In connection with the Merger, the Board of Directors has
approved certain changes to the Articles of Incorporation and Bylaws that
would be effected as a result of the Merger, to reflect the nature of the
surviving corporation's business and operations. See "Principal Differences
in Articles of Incorporation." Approval of the Merger will also constitute
approval of the proposed Amended and Restated Articles of Incorporation
(the "Proposed Articles") and Bylaws (the "Proposed Bylaws") of Televar, in
the forms attached
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as Exhibits 1 and 2 to the Plan of Merger, which is attached as Appendix A
to this Proxy Statement.
Plan of Merger
If the Merger is approved at the Special Meeting, the Company will be
merged with and into Televar pursuant to the Plan of Merger.
On the effective date of the Merger (the "Effective Date"), (i) the
legal existence of the Company as a separate corporation will cease, (ii)
Televar, as the surviving corporation, will succeed to the assets and
assume the liabilities of the Company, and (iii) each outstanding share of
the Common Stock of the Company will automatically be converted into
two-fifths of a share of common stock, $.01 par value per share, of
Televar. Any fractional shares resulting from the conversion will be
rounded up to the nearest whole share. On each shareholder's delivery of
outstanding certificates of stock of the Company to the Company's transfer
agent, new certificates representing Televar common stock will be issued.
On the effectiveness of the Merger, the surviving entity will be a
Washington corporation, and the Proposed Articles and Proposed Bylaws of
Televar, which are attached hereto as Exhibits 1 and 2, respectively, to
the Plan of Merger will be the Articles of Incorporation and the Bylaws of
the surviving corporation. The discussion in this Proxy Statement is
qualified in its entirety by reference to Appendix A and Exhibits 1 and 2
thereto.
Vote on Merger - Dissenters' Rights
If the Merger is effected, shareholders dissenting from the Merger may
have dissenters' rights to obtain payment of the fair value of their shares
of the Company's Common Stock in lieu of shares of Televar. A vote against
the Merger is not sufficient notice to the Company to perfect such rights
under the UBCA. A shareholder wishing to exercise such rights must (i) give
the Company written notice of the shareholder's intent to exercise such
rights before the shareholders' vote on the Merger is taken, (ii) not vote
his or her shares in favor of the Merger, (iii) timely send a demand for
payment to the Company after the Merger in accordance with a notice to be
sent to shareholders who have so perfected their dissenters' rights, and
(iv) follow certain other procedures set forth in Part 13 of the UBCA, a
copy of which is attached hereto as Appendix B.
Description of Surviving Corporation
Televar, a wholly owned subsidiary of the Company, is an Internet
services provider based in the Pacific Northwest. Televar provides Internet
and other integrated telecommunications services, including local, long
distance, and cellular services. Televar's strategy is to establish
positions in rural markets through a network of value-added resellers and
to gain market share in urban markets through acquisitions. Televar's main
focus is to provide fast, flat-rate access to the Internet on a
community-by-community basis. Televar offers dial-up access, dedicated
access, and, where available, ISDN and frame relay access. By offering
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competitive local service, local content and local support for each
community in which it does business, Televar intends to create strong brand
loyalty in its base of subscribers across geographic regions.
Televar was incorporated in Washington in 1984. From 1984 to February
1995, the company was primarily in the business of selling telephone
interconnection products and services. In February 1995, Televar sold the
telephone interconnect business and since that time has focused principally
on the Internet access and long distance telephone business. From February
1995 to June 30, 1996, Televar's Internet subscriber base grew from
approximately 100 to 4,800 individual subscribers. As of June 30, 1996,
Televar offered Internet access in 22 rural markets in Washington State.
As of June 30, 1996, Televar had 21 full time employees. Televar's
headquarters are located in approximately 3,800 feet of office space at 215
Yakima Street, Wenatchee, WA 98801, which are also the principal offices of
the Company, and its telephone number is 509-664-9004.
Effect of Merger - Change of Domicile
The Merger will change the legal domicile of the Company from Utah to
Washington and will produce changes that result from the differences
between Utah and Washington corporate law and the differences between the
Articles of Incorporation and Bylaws of the Company and the Proposed
Articles and Proposed Bylaws of the surviving corporation, Televar. The
most significant of those differences are described in this Proxy
Statement. See "Principal Differences in Articles of Incorporation" and
"Certain Differences in Washington and Utah Corporate Law."
Securities Act Consequences
After the Merger, Televar, the surviving corporation, will be a
publicly held company and will file with the Securities and Exchange
Commission and give its shareholders the same type of information that the
Company has previously filed and given. In general, security holders of the
surviving corporation will be in the same respective positions under the
Securities Act after the Merger as they were before the Merger.
Shareholders whose shares of Common Stock in the Company are freely
tradeable before the Merger will receive two-fifths the number of freely
tradeable shares of Televar. Shareholders holding restricted securities of
the Company will receive two-fifths the number of restricted securities of
Televar, subject to the same restrictions on transfer as the restrictions
to which their present securities are subject. In computing compliance with
the holding period of Rule 144 under the Securities Act, affiliates and
other shareholders will be deemed to have acquired their shares of common
stock of Televar on the date on which they are deemed to have acquired
their shares of Common Stock of the Company, and not on the date of the
Merger.
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Exchange Ratio and Reverse Stock Split
The Company is evaluating potential means of financing that would be
enhanced if the per share value of its common stock were increased. A
higher per share value is a requirement for certain exchange and market
listings and qualification for trading under state securities laws, and
would avoid the application of regulations aimed at "penny stocks."
Accordingly, the Board of Directors has approved, subject to shareholder
approval, a one-for-two-and-one-half exchange ratio in the Merger that
would effect a reverse split of the common stock in that ratio. On the
effectiveness of the Merger, each issued and outstanding share of common
stock would be automatically converted into two-fifths of a share of common
stock of the surviving corporation. No fractional shares would be issued as
a result of the Merger. If, after giving effect to the Merger, a
shareholder would otherwise hold a fractional share, the number of shares
held by the shareholder will be rounded up to the next highest whole
number.
Principal Differences in Articles of Incorporation
In connection with the Merger, the Company proposes to make certain
changes from its existing Articles of Incorporation and Bylaws, including
changes that the Board of Directors believes will facilitate possible
future financings and acquisitions and will help the Company to retain and
attract qualified individuals as directors and officers. This section
summarizes the principal differences between the Articles of Incorporation
and Bylaws of the Company now in force, and the Proposed Articles and
Proposed Bylaws of the surviving corporation.
Corporate Name. If the Merger is approved, the name of the Company
will change from "Jungle Street, Inc." to "Televar, Inc.". The Company's
operating subsidiary has used the name "Televar Northwest, Inc." in its
business. The Board of Directors believes that the change to the name
"Televar, Inc." will eliminate a description of the geographic scope of the
subsidiary's operations that is no longer accurate.
Authorized Stock. The Company is authorized to issue 50,000 shares of
Common Stock, $.001 par value per share. No preferred stock is now
authorized. The Proposed Articles would authorize 80 million shares of
common stock and 20 million shares of preferred stock, each having a par
value of $.01 per share. After the Merger, the Board of Directors of the
surviving corporation would have the authority to issue shares of preferred
stock in one or more series, up to a maximum of 20 million shares. The
Board of Directors would also have the authority to fix the powers,
designations, preferences and relative, participating, optional or other
rights of any series of preferred stock, including dividend rights,
conversion rights, voting rights, redemption terms, liquidation
preferences, sinking fund terms and the number of shares constituting any
series. Neither the current Articles of Incorporation nor the Proposed
Articles grant preemptive rights to shareholders.
The Company believes that the ability of its Board of Directors to
issue one or more series of preferred stock will assist the surviving
corporation in structuring possible future
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financings and acquisitions and in meeting other corporate needs that may
arise. After the Merger, the Board of Directors will have the authority,
subject to the exception described below, to determine the relative rights
and preferences and the timing and terms of issuance of any series of
preferred stock without having to incur the delay and expense of obtaining
further shareholder approval. The Company believes that the ability of its
Board of Directors to issue series of preferred stock and to determine the
rights associated with the preferred stock without further shareholder
approval will be useful in structuring transactions in which timing and
flexibility are important. Shareholder approval would be required if it is
required by applicable law or by the rules of any stock exchange or
automated quotation system on which securities of the surviving corporation
may be listed or traded.
The issuance of Preferred Stock in certain circumstances may dilute or
limit the present voting or other rights of holders of Common Stock,
delaying, deferring, or preventing a change of control of the Company, or
discouraging bids for the Common Stock at a premium over the market price
of the Common Stock.
Minimum and Maximum Number of Directors. The Company's Articles of
Incorporation require at least three and no more than nine directors; the
specific number is set by the Board of Directors. The surviving corporation
will require a minimum of one director but will not set a maximum number of
directors. The principal effect of this change is that the Board of
Directors, without shareholder approval, could expand the number of
directors beyond nine members. Vacancies created by any such expansion of
the Board of Directors, as with any other vacancies on the Board of
Directors, could be filled by appointment by the Board of Directors. Any
director so appointed would serve only until the next annual meeting of
shareholders, unless re-elected by the shareholders at that meeting. There
are now six directors.
Director Liability and Director and Officer Indemnification
Introduction. The Company wants to take actions that it believes will
help the surviving corporation retain and attract qualified directors and
officers and permit such directors and officers to exercise their business
judgment without being unreasonably exposed to the potentially high
personal costs and the uncertainties of litigation. Both the limitation of
director personal liability provision and the director and officer
indemnification provisions in the Proposed Articles and Bylaws are designed
to encourage the continued willingness of qualified individuals to serve as
directors and officers of the surviving corporation despite the risks
associated with increasing litigation involving the directors and officers
of public corporations.
In recent years, claims, lawsuits, or other proceedings seeking to
impose liability on directors and officers of publicly held corporations
have become increasingly common. The nature of the tasks and
responsibilities undertaken by directors and officers of publicly held
corporations such as the Company often require those individuals to make
difficult judgments that can expose them to personal liability. Litigation
that challenges the actions of directors and officers often involves damage
claims that are substantially disproportionate to the compensation received
by the directors or officers. This is particularly true for independent
directors, who
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are not officers or employees of the corporation. Such proceedings are
typically extremely expensive for the directors and officers, regardless of
the eventual outcome. Because of the costs and uncertainties of litigation
in general, it is often prudent to settle proceedings in which claims are
made against directors or officers, despite the defenses that may be
available to the claims asserted. Settlement amounts often exceed the
financial resources of most directors and officers. Even when a director or
an officer is not named as a defendant, such an individual may incur
substantial expenses, including attorneys' fees, if called as a witness or
involved in the litigation in any other manner. The Company is concerned
that such risks may result in an increasing reluctance on the part of
qualified individuals to serve, or to continue to serve, as directors and
officers or, that, if such directors and officers continue to serve, such
persons may hesitate in making independent and often difficult business
judgments in the face of risks to their personal financial positions.
Although the Company has not yet encountered difficulties in attracting and
retaining talented directors and officers, the Company wants to maintain
and enhance the ability of the surviving corporation to recruit and retain
qualified directors and officers.
Although directors' and officers' liability insurance provides
directors and officers some protection from personal losses resulting from
proceedings arising from their service as directors and officers, such
insurance often has relatively low limits of coverage and requires a
corporation to pay premiums that involve significant expense. Such
insurance also provides coverage to the corporation for certain expenses
incurred by the corporation in paying indemnification to its directors and
officers. Neither the Company nor Televar now carries such coverage.
Director Liability. The Proposed Articles include a provision limiting
personal liability of directors to the surviving corporation or its
shareholders for monetary damages for conduct as a director, to the maximum
extent permitted by law. When the current Articles of Incorporation were
adopted in 1980, the UBCA did not allow such a provision.
The limitation of director liability provision in the Proposed
Articles does not eliminate the liability of a director for (i) acts or
omissions involving intentional misconduct or a knowing violation of law by
a director; (ii) approval of certain dividends or other distributions
contrary to law; or (iii) any transaction from which the director
personally receives a benefit in money, property or services to which the
director is not legally entitled. The principal effect of this provision is
that a shareholder will be able to maintain an action for monetary damages
against a director of the surviving corporation only if the shareholder can
demonstrate conduct by a director that falls into one of the preceding
three categories. As a result, a shareholder would be unable to prevail in
an action against a director for monetary damages if the action related to
negligent or grossly negligent business decisions that did not constitute
intentional misconduct or one of the other stated exceptions. The provision
also would not eliminate monetary liability of directors for violations of
their duties under the federal securities laws or certain other laws. The
ability of shareholders to seek equitable remedies would also be
unimpaired, although equitable remedies may not be available in certain
circumstances. This provision would not eliminate liability for any act or
omission occurring before the Merger. In addition, the
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provision applies only to claims against a director for acts or omissions
in his or her role as a director and not in any other capacity, such as his
or her role as an officer of the surviving corporation.
The Company knows of no litigation involving directors of the Company
that would have been affected by this provision if it had previously been
in effect.
Indemnification of Directors and Officers. The Proposed Articles and
Bylaws provide for indemnification of directors and officers to the maximum
extent permitted by Washington law. The Merger would increase
indemnification rights of officers and directors of the Company.
The Company's Bylaws now require indemnification of directors,
officers, employees, and other agents of the Company if a specified
standard of conduct is satisfied. The Bylaws require indemnification of any
such person who is a party to any threatened, pending, or completed action,
suit or proceeding, by reason of being a director, officer, employee, or
other agent of the Company if the person acted in good faith and in a
manner that he or she reasonably believed to be in the best interests of
the Company and, with respect to any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful. If the action
is brought by or in the right of the Company, indemnification is required
if the individual acted in good faith, in a manner that he or she believed
to be in the best interests of the Company, and in a manner that was not
grossly negligent or with reckless disregard.
If, under the current Bylaws, it is determined that the required
standard of conduct is satisfied, the extent of the Company's
indemnification obligation under the current Bylaws depends on the nature
of the proceeding in which the director or officer is involved. If the
proceeding is not an action by or in the right of the Company, the Company
must provide indemnification against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by the director or officer in connection with the proceeding. If
the proceeding is a suit by the Company or a suit by a shareholder
asserting a right of the Company, the Company must provide indemnification
only against expenses, including amounts paid in settlement and attorneys'
fees, actually and reasonably incurred by the director or officer in
connection with the defense or settlement of the proceeding.
The Company's Bylaws now require that any indemnification be made by
the Company only as authorized in the specific case on a determination that
indemnification of the director or officer is proper in the circumstances.
The determination must be made (i) by the shareholders; (ii) by the Board
of Directors by majority vote of a quorum consisting of directors who were
not parties to the proceeding; or (iii) under certain circumstances, by
independent legal counsel in a written opinion.
The Proposed Articles and Bylaws are intended to provide mandatory
indemnification of directors and officers to the maximum extent permitted
by Washington law. Rather than requiring that directors or officers to meet
a specified standard of conduct as a condition of
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indemnification, the Bylaws of the Surviving Corporation (the "Proposed
Bylaws") require the surviving corporation to indemnify a director or
officer who is involved in certain lawsuits or other proceedings because
the person is or was a director or officer, unless the conduct of the
director or officer constituted: (i) acts or omissions finally adjudged to
be intentional misconduct or a knowing violation of law; (ii) conduct by a
director finally adjudged to be in violation of a statute relating to
unlawful dividends or other distributions; or (iii) any transaction with
respect to which it was finally adjudged that he or she personally received
a benefit in money, property, or services to which he or she was not
legally entitled. The Proposed Bylaws also contain an exception providing
that the surviving corporation would not be obliged to indemnify any person
in connection with any proceeding that was initiated by such person, except
a proceeding to enforce his or her indemnification rights, unless the
proceeding was authorized by the Board of Directors. If indemnification
were provided as required under the Proposed Bylaws, the surviving
corporation would be obligated to indemnify the director or officer against
all expenses, liabilities and losses, including attorneys' fees, costs,
judgments, fines, ERISA excise taxes or penalties and amounts to be paid in
settlement, that were reasonably incurred or suffered by the director or
officer in connection with the proceeding.
Rather than requiring a determination by the shareholders, the Board
of Directors, or independent legal counsel that indemnification is proper
in the circumstances, the Proposed Bylaw provision presumes that a director
or officer is entitled to indemnification on submission of a claim by the
director or officer, and expressly negates any defense or presumption based
on any such determination. To defeat a claim for indemnification, the
surviving corporation would have the burden of overcoming the presumption
in favor of indemnification and proving that the claimant has not met the
standard for indemnification under the Bylaw.
The Proposed Bylaw provision is similar to the current Bylaw provision
in that the Company must advance expenses incurred in defending a
proceeding before its final disposition, on receipt of an undertaking to
repay such amounts if a court determines that the director or officer is
not entitled to be indemnified by the Company.
The Proposed Bylaws also provide that the surviving corporation may,
by action of its Board of Directors from time to time, indemnify and
advance expenses for its employees and agents on the same terms and with
the same scope and effect as for directors and officers or on such other
terms as the Board of Directors may deem proper. This is similar to a
provision now in the Bylaws of the Company.
If the Merger is approved at the Special Meeting, both the
indemnification and the director liability provisions in the Proposed
Articles and Proposed Bylaws will apply prospectively to the existing
directors and officers in their capacities as directors and officers of the
surviving corporation. Accordingly, the directors of the Company have a
personal interest in these provisions that may be adverse to the interests
of the shareholders. However, the Board of Directors strongly believes that
these provisions are in the best interests of the Company as a way to
enhance its ability to retain and attract qualified directors and officers
and to permit them to exercise their business judgment on behalf of the
Company.
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Other Differences in the Charter Documents. The Proposed Articles
differ in other technical aspects, in some cases to allow for similar
corporate governance under differing statutory schemes. One such article
provides for a majority vote requirement for mergers and certain other
transactions, which is the same as the statutory requirement for such
transactions under the UBCA. Certain differences also exist between the
Proposed Bylaws and the Company's current Bylaws, but, except as described
herein, none of these provisions is expected to have a material effect on
the governance of the Company.
Certain Differences in Washington and Utah Corporate Law
Limitation on Director Liability. Under the UBCA, a corporation's
articles of incorporation may eliminate or limit the personal liability of
a director to the corporation or its shareholders for monetary damages for
any act or omission as a director. Such a provision cannot eliminate or
limit the liability of a director for (i) acts or omissions that
intentionally harm the corporation or its shareholders or intentionally
violate criminal law; (ii) receipt of a financial benefit to which he is
not entitled; (ii) payment of an unlawful distribution. When the Company's
current Articles of Incorporation were adopted, this provision was not
permitted; the Articles of Incorporation do not now eliminate or limit
personal liability of directors as permitted by Utah law.
The WBCA similarly allows a corporation's articles of incorporation to
eliminate or limit the personal liability of a director to the corporation
or its shareholders for monetary damages for his or her conduct as a
director. Such a provision cannot eliminate or limit the liability of a
director for: (i) acts or omissions involving intentional misconduct or a
knowing violation of law by a director; (ii) approval of certain dividends
or other distributions contrary to law; or (iii) any transaction from which
the director personally receives a benefit in money, property or services
to which the director is not legally entitled. The Proposed Articles
provide that no director shall be liable to the corporation or its
shareholders for monetary damages for his or her conduct as a director, to
the fullest extent permitted by Washington law.
Indemnification. The UBCA requires a corporation to indemnify a
director or officer who is successful on the merits or otherwise in the
defense of certain proceedings arising out of his or her serving in such
capacity, or in the defense of any claim, issue, or matter in such
proceeding, against expenses actually and reasonably incurred in connection
with such defense, unless its articles limit such indemnification. The WBCA
has a similar provision, but requires that the director or officer be
wholly successful on the merits or otherwise in the defense of the
proceeding.
The basic indemnification authority in the UBCA allows a corporation
to provide certain indemnity to a person who is made a party to certain
proceedings by reason of serving as a director, officer, employee, or agent
of the corporation if it is determined that a certain standard of conduct
is satisfied. That standard requires that the person have acted in good
faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to a
criminal proceeding, that the person had no reasonable cause
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to believe his or her conduct was unlawful. In the WBCA, under the basic
indemnification authority, a distinction is made between conduct of a
director or officer in his or her "official capacity" as a director or
officer, and conduct in any other capacity in which indemnification is
authorized. The basic standard of conduct for indemnification under the
WBCA requires that an individual have acted in good faith, and if acting in
an official capacity, that such individual reasonably believed that his or
her conduct was in the best interests of the corporation, or if acting in
any other capacity, that the individual reasonably believed that his or her
conduct was at least not opposed to the best interests of the corporation.
Washington and Utah apply similar standards to criminal proceedings.
Under both the UBCA and the WBCA, if it is determined that the
required standard of conduct is satisfied, the extent of the
indemnification authority of a corporation depends on the nature of the
proceeding in which the director or officer is involved. If the proceeding
is not an action by or in the right of the corporation, the corporation may
provide indemnification against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by the director or officer in connection with the proceeding. If
the proceeding is a suit by the corporation or a suit by a shareholder
asserting a right of the corporation, the corporation may provide
indemnification only against expenses, including amounts paid in settlement
and attorneys' fees, actually and reasonably incurred by the director or
officer in connection with the defense or settlement of the proceeding. As
a further limitation, the corporation may not indemnify the individual with
respect to any claim, issue, or matter as to which the person is adjudged
liable to the corporation or is adjudged liable, to the corporation or
otherwise, on the basis that he derived an improper personal benefit.
Under each statute, unless the corporation's articles of incorporation
provide otherwise, a court may order indemnification of a director who is a
party to a proceeding on application, if the court finds that the director
is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, even if (i) the director did not meet the statutory
standard of conduct or (ii) the director was held liable as described
above. In such cases, Utah law limits the indemnification to reasonable
expenses incurred; Washington law allows a corporation to provide otherwise
in the articles of incorporation or a bylaw, contract or resolution
approved or ratified by the shareholders.
Under the UBCA, unless ordered by a court, indemnification and
advancement of expenses must be authorized in each specific case, on a
determination that indemnification of the director, officer, employee or
agent or advancement is proper under the circumstances. Such a
determination must be made by the shareholders, by the board of directors
by majority vote of a quorum of directors who are not parties to the
proceeding, by a committee of directors who are not parties to the
proceeding, or by independent legal counsel in a written opinion. Both the
UBCA and the WBCA provide that shares owned or controlled by parties to the
proceeding may not be voted in any determination by the shareholders as to
whether indemnification is proper. The Washington law, unlike the Utah
statute, specifically requires an evaluation as to the reasonableness of
expenses.
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Under both the Utah and Washington statutes, the articles of
incorporation, the bylaws or an agreement by the corporation may provide
that expenses of officers or directors incurred in defending a proceeding
must be paid by the corporation as they are incurred and in advance of the
final disposition of the proceeding, if the officer or director makes an
affirmation of his or her good faith belief that he or she has met the
statutory standard of conduct for indemnification and undertakes to repay
any amount to which he or she is ultimately determined by a court not to be
entitled. In Utah, though, the board or shareholders authorizing the
advancement must also make a determination that, under the facts known at
the time of the advancement of expenses, indemnification of the individual
would not be precluded.
Under the UBCA, rights to indemnification that are in addition to
those mandated by the statute may be created by the articles of
incorporation, a bylaw, an agreement, a vote of shareholders or
disinterested directors, or otherwise. However, except for court-ordered
indemnification, no indemnification can be provided to or on behalf of a
director or officer unless first authorized in the specific case, and if a
final adjudication establishes his or her liability to the corporation or
that he or she is liable for the receipt of an improper personal benefit.
Under the Washington statute, indemnification of directors beyond the basic
statutory authority may be established by the articles of incorporation, or
a bylaw that is adopted or ratified by the shareholders, or a resolution
that is adopted or ratified, before or after any relevant event, by the
shareholders. However, no such indemnity shall indemnify any director from
or on account of: (i) acts or omissions of the director finally adjudged to
be intentional misconduct or a knowing violation of law; (ii) conduct of a
director finally adjudged to be in violation of a statute relating to
unlawful dividends or other distributions; or (iii) any transaction with
respect to which it was finally adjudged that such director personally
received a benefit in money, property, or services to which the director
was not legally entitled. The indemnification provisions of the Proposed
Articles and Bylaws establish mandatory indemnification of directors and
officers that goes beyond the basic statutory authority, as permitted by
this section of the WBCA. Accordingly, certain of the conditions and
limitations described above in the basic indemnification authority of the
WBCA will not apply to the mandatory indemnification of directors and
officers as provided in the Washington Bylaws. See "Principal Differences
in Articles of Incorporation - Indemnification of Directors and Officers,"
above. The approval by the shareholders of the Company of the Merger at the
Special Meeting will also constitute any required shareholder approval of
the indemnification provisions of the Proposed Articles and Bylaws.
Washington law requires that if a corporation indemnifies or advances
expenses to a director in connection with a proceeding by or in the right
of the corporation, the corporation shall report the indemnification or
advance to the shareholders with or before the notice of the next meeting
of the shareholders. Utah law contains no comparable requirement.
Statutory Provisions Relating to Acquisitions and Business
Combinations. The WBCA contains one statute specifically relating to
business combinations that would have the effect of hindering a hostile
takeover of the Company. That statute does not now apply to the Company,
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but will apply after the Merger. The comparable provision in the UBCA does
not now apply to the Company.
The portion of the WBCA known as the "Significant Business
Transactions Statute" applies to public companies that are incorporated
under Washington law. Subject to certain exceptions, the statute prohibits
a corporation from entering into any "significant business transactions"
with an "Acquiring Person" (defined generally as a person who or an
affiliated group that beneficially owns 10% or more of the outstanding
voting securities of a corporation) for a period of five years after such
person or affiliated group becomes an Acquiring Person unless the
transaction or share acquisition made by the Acquiring Person is approved
before the share acquisition by a majority of the target corporation's
directors. In addition, this statute prohibits a corporation subject
thereto from entering into a significant business transaction with an
Acquiring Person unless the consideration to be received by the
corporation's shareholders in connection with the proposed transaction
satisfies the "fair price" provisions set forth in the statute.
The comparable provision in the UBCA, the Control Shares Acquisition
Act, does not now apply to the Company and would not apply unless the
Company's principal place of business, principal office, or substantial
assets were within the state of Utah.
Right to Appraisal or Dissenters' Rights. Under the UBCA, a
shareholder is entitled to dissent from and, on perfection of his or her
appraisal right, to obtain payment of the fair value of his or her shares
in the event of certain corporate actions, including certain mergers and
share exchanges, certain sales or exchanges of substantially all the
property of the corporation not in the regular course of business. However,
for such transactions, unless the articles of incorporation, bylaws, or a
board resolution otherwise provide, the UBCA does not grant appraisal
rights: (i) if the shares of the corporation are listed on a national
securities exchange, are included in the National Market System by the
National Association of Securities Dealers, Inc. ("NASD"), or are held of
record by more than 2,000 shareholders (as long as in the merger the
shareholders receive only (A) cash, (B) shares of the surviving corporation
or of any other corporation the shares of which are listed on a national
securities exchange, included in the National Market System by the NASD, or
held of record by more than 2,000 shareholders, or (C) a combination
thereof); or (ii) if the corporation is the surviving corporation and no
vote of its shareholders is required by the plan of merger for the merger.
Washington law grants appraisal rights in these circumstances without
exception and also grants appraisal rights in the event of an amendment to
the corporation's articles of incorporation that reduces shares owned by a
shareholder to a fractional share that is to be acquired by the corporation
for cash.
Removal of Directors. Under both Utah and Washington law, the
shareholders may remove one or more directors with or without cause, unless
the articles of incorporation provide that directors may be removed only
for cause. The Proposed Articles do not contain such a provision. A
director of the surviving corporation may be removed by the shareholders
only
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at a special meeting called for the purpose of removing the director,
and the meeting notice must state that the purpose, or one of the purposes,
of the meeting is removal of the director. If a director is elected by the
holders of one or more classes or series of shares, only the holders of
those classes or series of shares may participate in the vote to remove
that director. Although the Company has no plans to issue any shares of
preferred stock, after the Merger, the Board of Directors would have the
authority to designate and issue one or more series of preferred stock that
give the holders of such shares certain voting rights, which could include
the right to elect one or more directors as a class or series or the right
to vote with the holders of Common Stock in the election of some or all
directors. In such event, only the holders of the class or series of stock
that had the right to elect one or more directors could participate in any
vote to remove such directors.
Both states also provide for the removal of directors through a
judicial proceeding initiated by shareholders if the court finds that
removal is in the corporation's best interest. In Utah, the court must also
find that the director engaged in fraudulent or dishonest conduct or gross
abuse of authority or discretion with respect to the corporation. In
Washington, for a court to so remove a director, it must find that the
director engaged in fraudulent or dishonest conduct with respect to the
corporation.
Transactions With Officers or Directors. The WBCA sets forth a safe
harbor for transactions between a corporation and one or more of its
directors. A conflicting interest transaction may not be enjoined or set
aside or give rise to damages or other sanctions if: (i) it is approved by
a majority of qualified directors after suitable disclosure; (ii) it is
approved by the affirmative vote of all qualified shares; or (iii) at the
time of commitment, the transaction was fair to the corporation. For
purposes of this provision, "qualified director" is one who does not have:
(a) a conflicting interest respecting the transaction, or (b) a familial,
financial, professional, or employment relationship with a second director
that would reasonably be expected to exert an influence on the first
director's judgment when voting on the transaction. "Qualified shares" are
defined generally as shares other than those beneficially owned, or the
voting of which is controlled, by a director who has a conflicting interest
respecting the transaction.
The UBCA contains nearly identical provisions, but omits to define the
degree of relationship necessary to disqualify a director under subsection
(b) above.
Amendment of Articles of Incorporation. The WBCA authorizes a
corporation's board of directors to make certain changes to its articles of
incorporation without shareholder approval, including a change of corporate
name, a change or elimination of provisions relating to the par value of
its shares, and, if the corporation has only one class of stock
outstanding, a change in the number of outstanding shares in order to
effectuate a stock split or stock dividend in the corporation's own shares.
Any other amendment to the articles of incorporation of a public company
must be recommended to the shareholders by the board of directors, unless
the board determines that because of a conflict of interest or other
special circumstances, it should make no recommendation, and the amendment
must be approved by a majority of all votes entitled to
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be cast by each voting group having a right to vote on the amendment. The
WBCA gives the holders of a class or series of stock the right to vote
separately on an amendment to the Articles if the class or series would be
adversely affected by the amendment as specified in the statute, even if
such shares are nonvoting shares under the articles of incorporation.
Under the UBCA, the board of directors has similar powers to amend the
articles without shareholder approval, except that it may change the name
only to change the corporate designation (for example, "Co." to "Inc.").
Any other amendment to the articles of incorporation must be recommended to
the shareholders by the board of directors, unless the board determines
that because of a conflict of interest or other special circumstances, it
should make no recommendation. The amendment must then be approved by a
majority of all votes entitled to be cast by each voting group that would
have dissenters' rights or be materially adversely affected by the
amendment's change of specific rights of the voting group, and a majority
vote of the shares represented at the meeting of each other voting group
having a right to vote on the amendment.
Shareholder Action Without a Meeting. Under the WBCA, shareholder
action may be taken without a meeting if written consents setting forth
such action are signed by all shareholders entitled to vote on the action.
The UBCA authorizes shareholder action without a meeting for all matters
except the election of directors if written consents are signed by
shareholders holding at least the number of votes needed to approve the
action at a meeting, generally a majority, unless otherwise provided in the
articles of incorporation. The Company's Bylaws now provide that
shareholder action may not be taken by written consent.
Mergers and Certain Other Transactions. Under the WBCA, certain
mergers, certain transactions involving a sale, lease, exchange or other
disposition of substantially all of a corporation's property other than in
the usual and regular course of business, or the dissolution of a
corporation must be approved by the board of directors and by two-thirds of
all votes entitled to be cast by each voting group of shareholders entitled
to vote as a separate group, unless another proportion is specified in the
articles of incorporation. The Proposed Articles provide that the corporate
transactions specified above are approved if any such transaction receives
the affirmative vote of holders of a majority of the shares entitled to
vote, or if applicable, a majority of shares in each voting group entitled
to vote separately on the transaction. Under the UBCA, a merger, a sale,
lease or exchange of all of a corporation's property and assets or the
dissolution of a corporation must be approved by the Board of Directors and
by a majority of all votes entitled to be cast on the matter (unless the
articles of incorporation require a larger percentage) and a majority of
all votes of any class of shares entitled to vote thereon as a class. Thus,
the effect of the Article provision in the Proposed Articles is to make the
required shareholder vote on such transactions a majority of the shares
entitled to vote on the matter, which is the same requirement that now
applies to the Company under the UBCA.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PLAN OF MERGER, AS
SET FORTH IN APPENDIX A TO THIS PROXY STATEMENT.
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PROPOSAL 2: ADOPTION OF 1996 STOCK INCENTIVE PLAN
The Board of Directors has adopted the 1996 Stock Incentive Plan (the
"Plan"). The purpose of the Plan is to enable the Company to attract and
retain the services of key personnel. The Board of Directors believes that
stock ownership by management and other key personnel is beneficial in
aligning management's and shareholders' interests in enhancing shareholder
value. The Plan provides for the award of incentive stock options to key
employees and the award of non-qualified stock options, stock appreciation
rights, bonus rights and other incentive grants to employees, non-employee
agents, consultants, advisors, persons involved in the sale or distribution
of the Company's services and independent contractors of the Company or any
subsidiary. The shareholders are asked to approve the Plan; a vote of the
majority of the shares represented at the meeting is required for such
approval.
No options have yet been granted under the Plan. Because the Plan is
not a formula Plan, the number of shares that will be granted to directors
and officers is not determinable, and is within the discretion of the Plan
Administrator, subject to Plan limits as described below. References to the
Company in this description and in the Plan shall mean the successor
corporation in the Merger if the Merger is effected.
Description of the Plan
The Plan provides for the award of incentive stock options ("ISOs") to
key employees and the award of non-qualified stock options ("NSOs"), stock
appreciation rights ("SARs"), bonus rights, and other incentive grants to
employees and certain non-employees (other than non-employee directors) who
have important relationships with the Company or its subsidiaries.
1,000,000 shares are reserved for issuance under the Plan.
Administration. The Plan may be administered by the Board of Directors
or by a committee of directors or officers of the Company (the
"Administrator"). The Board of Directors has designated an Option Committee
consisting of two independent directors to serve as the Administrator. The
Administrator determines and designates the individuals to whom awards
under the Plan should be made and the amount and terms and conditions of
the awards, except that if officers of the Company serve on the Option
Committee it may not grant options to such officers. The Option Committee
may adopt and amend rules relating to the administration of the Plan, but
only the Board of Directors may amend or terminate the Plan. The Plan is
administered in accordance with Rule 16b-3 adopted under the Exchange Act.
Eligibility. Awards under the Plan may be made to employees, including
employee directors, of the Company and its subsidiaries, and to nonemployee
agents, consultants, advisors, and other persons (but not including
nonemployee directors) that the Administrator believes have made or will
make an important contribution to the Company or its subsidiary.
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Shares Available. Subject to adjustment as provided in the Plan, a
maximum of 1,000,000 shares of Common Stock are reserved for issuance
thereunder. Because no other limitation is stated, the maximum number of
shares with respect to which options may be granted to any person during
any fiscal year is 1,000,000. If an option, SAR, or performance unit
granted under the Plan expires or is terminated or canceled, the unissued
shares subject to such option, SAR, or performance unit are again available
under the Plan. In addition, if shares sold or awarded as a bonus under the
Plan are forfeited to the Company or repurchased thereby, the number of
shares forfeited or repurchased are again available under the Plan.
Term. Unless earlier terminated by the Board of Directors, the Plan
will continue in effect until the earlier of: (i) ten years from the date
on which the Plan is adopted by the Board of Directors, and (ii) the date
on which all shares available for issuance under the Plan have been issued
and all restrictions on such shares have lapsed. The Board of Directors may
suspend or terminate the Plan at any time except with respect to options,
performance units, and shares subject to restrictions then outstanding
under the Plan.
Stock Option Grants. The Administrator may grant ISOs and NSOs under
the Plan. The Administrator determines the number of shares subject to each
option grant, the option price, the period of the option, the time or times
at which the option may be exercised (including whether the option will be
subject to any vesting requirements and whether there will be any
conditions precedent to exercise of the option), and the other terms and
conditions of the option.
ISOs are subject to special terms and conditions. The total fair
market value, on the date of the grant, of the Common Stock for which an
ISO is exercisable for the first time by the optionee during any calendar
year, may not exceed $100,000. No ISO may be exercisable after ten years
from the date of grant. The option price must be at least equal to the fair
market value of the Common Stock covered by the option at the date of
grant. If an ISO is granted to an employee who possesses more than 10% of
the total voting power of the Company's stock, the option price must be at
least 110% of the fair market value of the Common Stock subject to the
option on the date it is granted and the option is not exercisable five
years after the date of grant.
In general, a vested option may be exercised only if at the time of
such exercise the optionee is employed by or in the service of the Company
or any subsidiary thereof, within 12 months after termination of employment
by reason of death or disability, or within three months after termination
for any other reason except for cause. Options may not be assigned or
transferred by the optionee except by will or by the laws of descent and
distribution at the optionee's death. Shares may be issued on exercise of
an option only if full payment therefor has been made. On the exercise of
an option, the number of shares reserved for issuance under the Plan will
be reduced by the number of shares issued on exercise of the option.
Stock Appreciation Rights. The Administrator may grant SARs under the
Plan. Each SAR entitles the holder, on exercise, to receive from the
Company an amount equal to the excess of the fair market value on the date
of exercise of one share of Common Stock of the
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Company over its fair market value on the date of grant (or, in the case of
a SAR granted in connection with an option, the excess of the fair market
value of one share of Common Stock of the Company over the option price per
share under the option to which the SAR relates), multiplied by the number
of shares covered by the SAR or the option. Payment by the Company on
exercise of a SAR may be made in Common Stock, in cash, or by a combination
of Common Stock and cash.
If an SAR is granted in connection with an option: (i) the SAR shall
be exercisable only to the extent and on the same conditions that the
related option could be exercised; (ii) the SAR shall be exercisable only
when the fair market value of the stock exceeds the option price of the
related option; (iii) the SAR shall be for no more than 100% of the excess
of the fair market value of the stock at the time of exercise over the
option price; (iv) on exercise of the SAR, the option or portion thereof to
which the SAR relates terminates; and (v) on exercise of the option, the
related SAR or portion thereof terminates.
SARs may not be assigned or transferred except by will or by the laws
of descent and distribution at the time of the holder's death. On the
exercise of a SAR for shares, the number of shares reserved for issuance
under the Plan will be reduced by the number of shares issued. Cash
payments of SARs will not reduce the number of shares of Common Stock
reserved for issuance under the Plan. No SARs have been granted under the
Plan.
Restricted Stock. The Administrator may issue shares of Common Stock
under the Plan subject to the terms, conditions, and restrictions
determined thereby. On the issuance of restricted stock, the number of
shares reserved for issuance under the Plan shall be reduced by the number
of shares issued. No restricted shares have been granted under the Plan.
Stock Bonus Awards. The Administrator may award shares of Common Stock
as a stock bonus under the Plan. The Administrator may determine the
recipients, time, and size of the awards. Stock received as a stock bonus
is subject to the terms, conditions, and restrictions determined by the
Administrator when the stock is awarded. No stock bonus awards have been
granted under the Plan.
Cash Bonus Rights. The Administrator may grant cash bonus rights under
the Plan in connection with (i) options granted or previously granted,
(ii) SARs granted or previously granted, (iii) stock bonuses awarded or
previously awarded, and (iv) shares issued under the Plan. Bonus rights
granted in connection with options entitle the optionee to a cash bonus if
and when the related option is exercised. The amount of the bonus is
determined by multiplying the excess of the total fair market value of the
shares acquired on the exercise over the total option price for the shares
by the applicable bonus percentage. The bonus rights granted in connection
with an SAR entitle the holder to a cash bonus when the SAR is exercised.
The amount of the bonus is determined by multiplying the total fair market
value of the shares or cash received pursuant to the exercise of the SAR by
the applicable percentage. The bonus percentage applicable to any bonus
right is determined by the Administrator but may not exceed 75%. Bonus
rights granted in connection with stock bonuses entitle the recipient to a
cash bonus, in
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an amount determined by the Administrator, when the stock is awarded or
purchased or any restrictions to which the stock is subject lapse. No bonus
rights have been granted under the Plan.
Performance Units. The Administrator may grant performance units
consisting of monetary units that may be earned if the Company achieves
certain goals established by the Committee over a designated period of
time. The goals established by the Administrator may include earnings per
share, return on shareholders' equity, return on invested capital, and
similar benchmarks. An award may be paid in cash, Common Stock, or both,
and may be paid when earned, or vested and deferred, as the Administrator
determines. Performance Units may not be assigned or transferred by the
holder except by will or by the laws of descent and distribution at the
holder's death. The number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued on payment of an award. No
performance units have been granted under the Plan.
Changes in Capital Structure. The Plan provides that if the
outstanding Common Stock of the Company is increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
recapitalization, stock split, or certain other transactions, the
Administrator will make appropriate adjustments in the number and kind of
shares available for grants under the Plan. In addition, the Administrator
will make appropriate adjustments in the number and kind of shares as to
which outstanding options will be exercisable. In the event of a merger,
consolidation or other fundamental corporate transformation, the Board of
Directors may, in its sole discretion, permit outstanding options to remain
in effect in accordance with their terms; to be converted into options to
purchase stock in the surviving or acquiring corporation in the
transaction; or to be exercised, to the extent then exercisable, during a
30-day period before the consummation of the transaction.
Tax Consequences
Certain options authorized to be granted under the Plan are intended
to qualify as ISOs for federal income tax purposes. Under current federal
income tax law, the optionee will not recognize income on grant or on a
proper exercise of the ISO. If an employee exercises an ISO and does not
dispose of any of the option shares within two years after the date of
grant and within one year after the date of exercise, any gain realized on
subsequent disposition of the shares will be treated as income from the
sale or exchange of a capital asset. If an employee disposes of shares
acquired on exercise of an ISO before the expiration of either the one-year
holding period or the two-year waiting period, any amount realized will be
taxable as ordinary compensation income in the year of such disqualifying
disposition to the extent that the lesser of the fair market value of the
shares on the exercise date or the fair market value of the shares on the
date of disposition exceeds the exercise price. The Company will not be
allowed any deduction for federal income tax purposes on either the grant
or exercise of an ISO. On any disqualifying disposition by an employee, the
Company will generally be entitled to a deduction to the extent the
employee realized ordinary income.
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Certain options authorized to be granted under the Plan will be
treated as NSOs for federal income tax purposes. Under current federal
income tax, no income is realized by the grantee of an NSO until the option
is exercised. At the time of exercise of an NSO, the optionee will realize
ordinary compensation income, and the Company will generally be entitled to
a deduction, in the amount by which the market value of the shares subject
to the option at the time of exercise exceeds the exercise price. The
Company is required to withhold on the income amount. On the sale of shares
acquired upon exercise of an NSO, the excess of the amount realized from
the sale over the market value of the shares on the date of exercise will
be taxable.
An employee who receives stock in connection with the performance of
services will generally realize taxable income at the time of receipt
unless the shares are substantially nonvested for purposes of section 83 of
the Internal Revenue Code of 1986, as amended, and no section 83(b)
election is made. If the shares are not vested at the time of receipt, the
employee will realize taxable income in each year in which a portion of the
shares substantially vest, unless the employee elects under section 83(b)
within 30 days after the original transfer. The Company will generally be
entitled to a tax deduction in the amount includable as income by the
employee at the same time or times as the employee recognizes income with
respect to the shares. The Company is required to withhold on the income
amount. A participant who receives a cash bonus right under the Plan will
generally recognize income equal to the amount of the cash bonus paid at
the time of receipt, and the Company will generally be entitled to a
deduction equal to the income recognized by the participant.
Certain Tax Considerations Related to Executive Compensation
As a result of Section 162(m) of the Code, if compensation paid by the
Company to a "covered employee" (the chief executive officer and the next
four highest paid employees) in a year were to exceed a total of
$1,000,000, the Company's deduction for such compensation could be limited
to $1,000,000. The Company does not now compensate its covered employees in
a manner sufficient to invoke this limitation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE 1996 STOCK
INCENTIVE PLAN, AS SET FORTH IN APPENDIX B TO THIS PROXY STATEMENT.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors, and persons who own more than 10
percent of the Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors, and beneficial owners of more than 10 percent of the
Common Stock are required by the SEC regulation to furnish the Company with
copies of all section 16(a) reports they file. Based solely on a review of
such reports received by the Company and on written representations from
certain reporting persons that they have complied
23
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with the relevant filing requirements, the Company believes that all
section 16(a) filing requirements applicable to its executive officers and
directors have been complied with.
DISCRETIONARY AUTHORITY
While the Notice of Special Meeting of Shareholders provides for
transaction of any other business that properly comes before the meeting,
the Board of Directors has no knowledge of any matters to be presented at
the meeting other than the matters described in this proxy statement. The
enclosed proxy, however, gives discretionary authority to the proxy holders
to vote in accordance with their judgment if any other matters are
presented.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON ARE URGED TO SIGN AND
RETURN THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
............................................By Order of the Board of Directors
........................................... Charles D. DeJong
Chairman of the Board and
Chief Executive Officer
Wenatchee, Washington..........................
[Mailing date].................................
APPENDIX A Plan of Merger
APPENDIX B Part 13 of Utah Business Corporation Act
APPENDIX C 1996 Stock Incentive Plan
APPENDIX D Proxy
24
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated ________, 1996, between
Televar, Inc., a Washington corporation (the "Surviving Corporation"), and
Jungle Street, Inc., a Utah corporation (the "Merging Corporation").
1. Parties. The name of the Merging Corporation is Jungle Street, Inc,
a Utah corporation. The name of the Surviving Corporation is Televar, Inc,
a Washington corporation.
2. Outstanding Shares. The Surviving Corporation has issued and
outstanding 1,000 shares of common stock, $.0001 par value per share, and
the Merging Corporation has issued and outstanding 13,968,325 shares of
common stock, $.001 par value per share. All of the outstanding shares of
capital stock of Surviving Corporation are owned, beneficially and of
record, by Merging Corporation.
3. Terms and Conditions; Conversion of Shares. Each share of common
stock of Merging Corporation issued and outstanding immediately prior to
the time of filing of this Plan of Merger with the Secretary of State of
the State of Washington shall, at the Effective Time, be converted into .20
shares of common stock of Surviving Corporation. Any fractional shares
resulting from such one-for-five conversion shall be rounded up to the next
nearest whole number. Each share of common stock of Merging Corporation
issued and outstanding immediately prior to the time of filing of this Plan
of Merger with the Secretary of State of the State of Washington shall, at
the Effective Time, be cancelled.
4. Effect of Merger. When the merger has become effective in
accordance with the provisions hereof:
a. Merging Corporation and Surviving Corporation shall be a
single corporation, which shall be the Surviving Corporation.
b. The separate existence of the Merging Corporation shall cease.
c. The Articles of Incorporation and the Bylaws attached as
Exhibits 1 and 2 hereto, respectively, shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation after the Effective
Time. The Board of Directors and officers of the Merging Corporation shall
be the Board of Directors and officers of the Surviving Corporation.
d. The Surviving Corporation shall thereupon and thereafter
possess all the rights, privileges, immunities, and franchises, of a public
as well as of a private nature, of each of the merging corporations; and
all property, real, personal and mixed; and all debts due on whatever
account, including subscriptions to shares, and all other choses in action,
and all and every other interest of or belonging to or due to each of the
corporations so
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Appendix A - Agreement and Plan of Merger
merged, shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and the title to any
real estate, or any interest therein, vested in either of such corporations
shall not revert or be in any way impaired by reason of such merger.
e. The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the corporations
so merged.
5. Effective Time. The Effective Time of the merger shall be the time
and date on which Articles of Merger effecting this Plan of Merger are
filed with the Secretary of State of Washington, which shall be immediately
after such Articles of Merger are also filed with the appropriate agency of
the State of Utah.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be duly executed on the date first above written.
SURVIVING CORPORATION:
TELEVAR, INC., a Washington corporation
By
------------------------------------------
Its:
-----------------------------------
MERGING CORPORATION:
JUNGLE STREET, INC., a
Utah corporation
By
------------------------------------------
Its:
-----------------------------------
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Appendix A- Plan of Merger
APPENDIX A
EXHIBIT 1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
TELEVAR, INC.
I.
Name
The name of this Corporation is Televar, Inc.
II.
Capital Stock
A. Authorized Capital. This Corporation is authorized to issue a total of
one hundred million (100,000,000) shares, $.01 par value per share,
consisting of eighty million (80,000,000) shares to be designated
"Common Stock" and twenty million (20,000,000) shares to be designated
"Preferred Stock." Subject to any rights expressly granted to
Preferred Stock issued pursuant to Paragraph B of this Article, the
Common Stock shall have all the rights ordinarily associated with
common shares, including but not limited to general voting rights,
general rights to dividends, and liquidation rights. The Preferred
Stock shall have the rights and preferences described in Paragraph B
of this Article or in any resolution of the Board of Directors adopted
pursuant to Paragraph B.
B. Issuance of Preferred Stock in Series. The Preferred Stock may be
issued from time to time in one or more series in any manner permitted
by law and these Articles of Incorporation, as determined from time to
time by the Board of Directors and stated in the resolution or
resolutions providing for its issuance, prior to the issuance of any
shares thereof. The Board of Directors shall have the authority to fix
and determine,
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Appendix A- Plan of Merger
subject to the provisions hereof, the rights and preferences of the
shares of any series so established. Unless otherwise provided in the
resolution establishing a series of shares of Preferred Stock, prior
to the issuance of any shares of a series so established or to be
established, the Board of Directors may by resolution amend the
relative rights and preferences of the shares of such series, and,
after the issuance of shares of a series whose number has been
designated by the Board of Directors, the resolution establishing the
series may be amended by the Board of Directors to decrease (but not
below the number of shares of such series then outstanding) the number
of shares of that series.
III.
No Preemptive Rights
Except as may otherwise be provided by the Board of Directors, no
holder of any shares of this Corporation shall have any preemptive right to
purchase, subscribe for or otherwise acquire any securities of this
Corporation of any class or kind now or hereafter authorized.
IV.
Number of Directors
This Corporation shall have at least one director, the actual number
to be fixed in accordance with the Bylaws.
V.
No Cumulative Voting
There shall be no cumulative voting of shares in this Corporation.
VI.
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Appendix A- Plan of Merger
Shareholder Voting on Significant Corporate Action
Any corporate action for which the Washington Business Corporation
Act, as then in effect, would otherwise require approval by either a
two-thirds vote of the shareholders of this Corporation or by a two-thirds
vote of one or more voting groups shall be deemed approved by the
shareholders or the voting group(s) if it is approved by the affirmative
vote of the holders of a majority of shares entitled to vote or, if
approval by voting groups is required, by the holders of a majority of
shares within each voting group entitled to vote separately.
Notwithstanding this Article, effect shall be given to any other provision
of these Articles that specifically requires a greater vote for approval of
any particular corporate action.
VII.
Limitation on Director Liability
To the fullest extent permitted by Washington law, a director of this
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for his or her conduct as a director. Any amendment to or
repeal of this Article shall not adversely affect any right of a director
of this Corporation hereunder with respect to any acts or omissions of the
director occurring prior to amendment or repeal.
VIII.
Indemnification of Directors
To the fullest extent permitted by its Bylaws and Washington law, this
Corporation is authorized to indemnify any of its directors. The Board of
Directors shall be entitled to determine the terms of indemnification,
including advance of expenses, and to give effect thereto through the
adoption of Bylaws, approval of agreements, or by any other manner approved
by the Board of Directors. Any amendment to or repeal of this Article shall
not adversely affect any right of an individual with respect to any right
to indemnification arising prior to such amendment or repeal.
IX.
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Appendix A- Plan of Merger
Registered Office and Registered Agent
A. The registered agent of this Corporation in the State of Washington is
JGB Service Corporation.
B. The street address of the registered agent at the registered office of
this Corporation in the State of Washington is One Union Square, Suite
3600, 600 University Street, Seattle, WA 98101.
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Appendix A- Plan of Merger
APPENDIX A
EXHIBIT 2
AMENDED AND RESTATED BYLAWS
OF
TELEVAR, INC.
I.
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
A. Annual Meeting. The annual meeting of the shareholders of this
corporation (the "Corporation") for the election of directors and for
the transaction of such other business as may properly come before the
meeting shall be held each year at the principal office of the
Corporation, or at some other place either within or without the State
of Washington as designated by the Board of Directors, on the day and
at the time specified in Exhibit A, which is attached hereto and
incorporated herein by this reference, or on such other day and time
as may be set by the Board of Directors. If the specified day is a
Sunday or a legal holiday, then the meeting will take place on the
next business day at the same time or on such other day and time as
may be set by the Board of Directors.
B. Special Meetings. Special meetings of the shareholders for any purpose
or purposes may be called at any time by the Board of Directors, the
Chairman of the Board, the President, a majority of the Board of
Directors, or any shareholder or shareholders holding in the aggregate
one-fourth of the voting power of all shareholders. The meetings shall
be held at such time and place as the Board of Directors may
prescribe, or, if not held upon the request of the Board of Directors,
at such time and place as may be established by the President or by
the Secretary in the President's absence. Only business within the
purpose or purposes described in the meeting notice may be conducted.
C. Notice of Meetings. Written notice of the place, date and time of the
annual shareholders' meeting and written notice of the place, date,
time and purpose or purposes of special shareholders' meetings shall
be delivered not less than 10 (or, if required by Washington law, 20)
or more than 60 days before the date of the meeting, either
personally, by facsimile, or by mail, or in any other manner approved
by law, by or at the direction of the Chairman of the Board, the
President or the Secretary, to each shareholder of record entitled to
notice of such meeting. Mailed notices shall
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Appendix A- Plan of Merger
be deemed to be delivered when deposited in the mail, first-class
postage prepaid, correctly addressed to the shareholder's address
shown in the Corporation's current record of shareholders.
D. Waiver of Notice. Except where expressly prohibited by law or the
Articles of Incorporation, notice of the place, date, time and purpose
or purposes of any shareholders' meeting may be waived in a signed
writing delivered to the Corporation by any shareholder at any time,
either before or after the meeting. Attendance at the meeting in
person or by proxy waives objection to lack of notice or defective
notice of the meeting unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting. A shareholder waives objection to consideration of a
particular matter at a meeting that is not within the purpose or
purposes described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
E. Shareholders' Action Without a Meeting. The shareholders may take any
action without a meeting that they could properly take at a meeting,
if one or more written consents setting forth the action so taken are
signed by all of the shareholders entitled to vote with respect to the
subject matter and are delivered to the Corporation for inclusion in
the minutes or filing with the corporate records. If required by
Washington law, all nonvoting shareholders must be given written
notice of the proposed action at least ten days before the action is
taken, unless such notice is waived in a manner consistent with these
Bylaws. Actions taken under this section are effective when all
consents are in the possession of the Corporation, unless otherwise
specified in the consent. A shareholder may withdraw consent only by
delivering a written notice of withdrawal to the Corporation prior to
the time that all consents are in the possession of the Corporation.
F. Telephone Meetings. Shareholders may participate in a meeting of
shareholders by means of a conference telephone or any similar
communications equipment that enables all persons participating in the
meeting to hear each other during the meeting. Participation by such
means shall constitute presence in person at a meeting.
G. List of Shareholders. At least ten days before any shareholders'
meeting, the Secretary of the Corporation or the agent having charge
of the stock transfer books of the Corporation shall have compiled a
complete list of the shareholders entitled to notice of a
shareholders' meeting, arranged in alphabetical order and by voting
group, with the address of each shareholder and the number, class, and
series, if any, of shares owned by each.
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Appendix A- Plan of Merger
H. Quorum and Voting. The presence in person or by proxy of the holders
of a majority of the votes entitled to be cast on a matter at a
meeting shall constitute a quorum of shareholders for that matter. If
a quorum exists, action on a matter shall be approved by a voting
group if the votes cast within a voting group favoring the action
exceed the votes cast within the voting group opposing the action,
unless a greater number of affirmative votes is required by the
Articles of Incorporation or by law. If the Articles of Incorporation
or Washington law provide for voting by two or more voting groups on a
matter, action on a matter is taken only when voted upon by each of
those voting groups counted separately. Action may be taken by one
voting group on a matter even though no action is taken by another
voting group.
I. Adjourned Meetings. If a shareholders' meeting is adjourned to a
different place, date or time, whether for failure to achieve a quorum
or otherwise, notice need not be given of the new place, date or time
if the new place, date or time is announced at the meeting before
adjournment. When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in these Bylaws,
that determination shall apply to any adjournment thereof, unless
Washington law requires fixing a new record date. If Washington law
requires that a new record date be set for the adjourned meeting,
notice of the adjourned meeting must be given to shareholders as of
the new record date. Any business may be transacted at an adjourned
meeting that could have been transacted at the meeting as originally
called.
J. Proxies. A shareholder may appoint a proxy to vote or otherwise act
for the shareholder by signing an appointment form, either personally
or by an agent. No appointment shall be valid after 11 months from the
date of its execution unless the appointment form expressly so
provides. An appointment of a proxy is revocable unless the
appointment is coupled with an interest. No revocation shall be
effective until written notice thereof has actually been received by
the Secretary of the Corporation or any other person authorized to
tabulate votes.
II.
BOARD OF DIRECTORS
A. Number and Qualification. The business affairs and property of the
Corporation shall be managed under the direction of a Board of
Directors, the number of members of which is set forth in Exhibit A.
The Board of Directors may increase or decrease this number by
resolution. A decrease in the number of directors shall not shorten
the term of an incumbent director.
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Appendix A- Plan of Merger
B. Election - Term of Office. The directors shall be elected by the
shareholders at each annual shareholders' meeting or at a special
shareholders' meeting called for such purpose. Despite the expiration
of a director's term, the director continues to serve until his or her
successor is elected and qualified or until there is a decrease in the
authorized number of directors.
C. Vacancies. Except as otherwise provided by law, vacancies in the Board
of Directors, whether caused by resignation, death, retirement,
disqualification, removal, increase in the number of directors, or
otherwise, may be filled for the remainder of the term by the Board of
Directors, by the shareholders, or, if the directors in office
constitute less than a quorum of the Board of Directors, by an
affirmative vote of a majority of the remaining directors. The term of
a director elected to fill a vacancy expires at the next shareholders'
meeting at which directors are elected. A vacancy that will occur at a
specific later date may be filled before the vacancy occurs, but the
new director may not take office until the vacancy occurs.
D. Quorum and Voting. At any meeting of the Board of Directors, the
presence in person (including presence by electronic means such as a
telephone conference call) of a majority of the number of directors
presently in office shall constitute a quorum for the transaction of
business. Notwithstanding the foregoing, in no case shall a quorum be
less than one-third of the authorized number of directors. If a quorum
is present at the time of a vote, the affirmative vote of a majority
of the directors present at the time of the vote shall be the act of
the Board of Directors and of the Corporation except as may be
otherwise specifically provided by the Articles of Incorporation, by
these Bylaws, or by law. A director who is present at a meeting of the
Board of Directors when action is taken is deemed to have assented to
the action taken unless: (a) the director objects at the beginning of
the meeting, or promptly upon his or her arrival, to holding it or to
transacting business at the meeting; (b) the director's dissent or
abstention from the action taken is entered in the minutes of the
meeting; or (c) the director delivers written notice of his or her
dissent or abstention to the presiding officer of the meeting before
its adjournment or to the Corporation within a reasonable time after
adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.
E. Regular Meetings. Regular meetings of the Board of Directors shall be
held at such place, date and time as shall from time to time be fixed
by resolution of the Board.
F. Special Meetings. Special meetings of the Board of Directors may be
held at any place and at any time and may be called by the Chairman of
the Board, the President, or any two or more directors.
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Appendix A- Plan of Merger
G. Notice of Meetings. Unless the Articles of Incorporation provide
otherwise, any regular meeting of the Board of Directors may be held
without notice of the date, time, place, or purpose of the meeting.
Any special meeting of the Board of Directors must be preceded by at
least two days' notice of the date, time, and place of the meeting,
but not of its purpose, unless the Articles of Incorporation or these
Bylaws require otherwise. Notice may be given personally, by
facsimile, by mail, or in any other manner allowed by law. Oral notice
shall be sufficient only if a written record of such notice is
included in the Corporation's minute book. Notice shall be deemed
effective at the earliest of: (a) receipt; (b) delivery to the proper
address or telephone number of the director as shown in the
Corporation's records; or (c) five days after its deposit in the
United States mail, as evidenced by the postmark, if correctly
addressed and mailed with first-class postage prepaid. Notice of any
meeting of the Board of Directors may be waived by any director at any
time, by a signed writing, delivered to the Corporation for inclusion
in the minutes, either before or after the meeting. Attendance or
participation by a director at a meeting shall constitute a waiver of
any required notice of the meeting unless the director promptly
objects to holding the meeting or to the transaction of any business
on the grounds that the meeting was not lawfully convened and the
director does not thereafter vote for or assent to action taken at the
meeting.
H. Directors' Action Without A Meeting. The Board of Directors or a
committee thereof may take any action without a meeting that it could
properly take at a meeting if one or more written consents setting
forth the action are signed by all of the directors, or all of the
members of the committee, as the case may be, either before or after
the action is taken, and if the consents are delivered to the
Corporation for inclusion in the minutes or filing with the corporate
records. Such action shall be effective upon the signing of a consent
by the last director to sign, unless the consent specifies a later
effective date.
I. Committees of the Board of Directors. The Board of Directors, by
resolutions adopted by a majority of the members of the Board of
Directors in office, may create from among its members one or more
committees and shall appoint the members thereof. Each such committee
must have two or more members, who shall be directors and who shall
serve at the pleasure of the Board of Directors. Each committee of the
Board of Directors may exercise the authority of the Board of
Directors to the extent provided in its enabling resolution and any
pertinent subsequent resolutions adopted in like manner, provided that
the authority of each such committee shall be subject to applicable
law. Each committee of the Board of Directors shall keep regular
minutes of its proceedings and shall report to the Board of Directors
when requested to do so.
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Appendix A- Plan of Merger
J. Telephone Meetings. Members of the Board of Directors or of any
committee appointed by the Board of Directors may participate in a
meeting of the Board of Directors or committee by means of a
conference telephone or similar communications equipment that enables
all persons participating in the meeting to hear each other during the
meeting. Participation by such means shall constitute presence in
person at a meeting.
K. Compensation of Directors. The Board of Directors may fix the
compensation of directors as such and may authorize the reimbursement
of their expenses.
III.
OFFICERS
A. Officers Enumerated - Election. The officers of the Corporation shall
consist of such officers and assistant officers as may be designated
by resolution of the Board of Directors. The officers may include a
Chairman of the Board, Chief Executive Officer, a President, one or
more Vice Presidents, a Secretary, a Treasurer, and any assistant
officers. The officers shall hold office at the pleasure of the Board
of Directors. Unless otherwise restricted by the Board of Directors,
the Chief Executive Officer may appoint any assistant officer, the
Secretary may appoint one or more Assistant Secretaries, and the
Treasurer may appoint one or more Assistant Treasurers; provided that
any such appointments shall be recorded in writing in the corporate
records.
B. Qualifications. None of the officers of the Corporation need be a
director. Any two or more corporate offices may be held by the same
person.
C. Duties of the Officers. Unless otherwise prescribed by the Board of
Directors, the duties of the officers shall be as follows:
Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at meetings of the Board of Directors and of the
shareholders, shall be responsible for carrying out the plans and
directives of the Board of Directors, and shall report to and consult with
the Board of Directors. The Chairman of the Board shall have such other
powers and duties as the Board of Directors may from time to time
prescribe.
Chief Executive Officer. The Chief Executive Officer shall be the
chief executive officer of the Corporation and shall exercise the usual
powers pertaining to such office. The Chief Executive Officer shall be in
general charge of the business and affairs of the
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Appendix A- Plan of Merger
Corporation, subject to control by the Board of Directors. The Chief
Executive Officer shall report to and consult with the Board of Directors
and shall have such other powers and duties as the Board of Directors may
from time to time prescribe.
President. The President shall exercise the usual executive
powers pertaining to the office of President. In the absence of a Chairman
of the Board, the President shall preside at meetings of the Board of
Directors and of the shareholders, perform the other duties of the Chairman
of the Board prescribed in this section, and shall have such other powers
and duties as the Board of Directors may from time to time designate. In
addition, if there is no Secretary in office, the President shall perform
the duties of the Secretary.
Vice President. Each Vice President shall perform such duties as
the Board of Directors may from time to time designate. In addition, the
Vice President, or if there is more than one, the most senior Vice
President available, shall act as President in the absence or disability of
the President and the Chief Executive Officer.
Secretary. The Secretary shall be responsible for and shall keep,
personally or with the assistance of others, records of the proceedings of
the directors and shareholders; authenticate records of the Corporation;
attest all certificates of stock in the name of the Corporation; keep the
corporate seal, if any, and affix the same to, or cause a facsimile thereof
to be printed on, certificates of stock and other proper documents; keep a
record of the issuance of certificates of stock and the transfers of the
same, or cause such a record to be kept; and perform such other duties as
the Board of Directors may from time to time designate.
Treasurer. The Treasurer shall have the care and custody of, and
be responsible for, all funds and securities of the Corporation and shall
cause to be kept regular books of account. The Treasurer shall cause to be
deposited all funds and other valuable effects in the name of the
Corporation in such depositories as may be designated by the Board of
Directors. In general, the Treasurer shall perform all of the duties
incident to the office of Treasurer, and such other duties as from time to
time may be assigned by the Board of Directors.
Assistant Officers. Assistant officers may consist of one or more
Assistant Vice Presidents, one or more Assistant Secretaries, and one or
more Assistant Treasurers. Each assistant officer shall perform those
duties assigned to him or her from time to time by the Board of Directors,
the President, or the officer who appointed him or her.
D. Vacancies. Vacancies in any office arising from any cause may be
filled by the Board of Directors at any regular or special meeting.
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Appendix A- Plan of Merger
E. Removal. Any officer or agent may be removed by action of the Board of
Directors with or without cause, but any removal shall be without
prejudice to the contract rights, if any, of the person removed.
Election or appointment of an officer or agent shall not of itself
create any contract rights.
IV.
SHARES AND CERTIFICATES OF SHARES
A. Share Certificates. Share certificates shall be issued in numerical
order, and each shareholder shall be entitled to a certificate signed
by the President or a Vice President, and attested by the Secretary or
an Assistant Secretary. Share certificates may be sealed with the
corporate seal, if any. Facsimiles of the signatures and seal may be
used as permitted by law. Every share certificate shall state:
1. the name of the Corporation;
2. that the Corporation is organized under the laws of the State of
Washington;
3. the name of the person to whom the share certificate is issued;
4. the number, class and series (if any) of shares that the
certificate represents; and
5. if the Corporation is authorized to issue shares of more than one
class or series, that upon written request and without charge,
the Corporation will furnish any shareholder with a full
statement of the designations, preferences, limitations and
relative rights of the shares of each class or series, and the
authority of the Board of Directors to determine variations for
future series.
B. Consideration for Shares. Shares of the Corporation may be issued for
such consideration as shall be determined by the Board of Directors to
be adequate. The consideration for the issuance of shares may be paid
in whole or in part in cash, or in any tangible or intangible property
or benefit to the Corporation, including but not limited to promissory
notes, services performed, contracts for services to be performed, or
other securities of the Corporation. Establishment by the Board of
Directors of the amount of consideration received or to be received
for shares of the Corporation shall be deemed to be a determination
that the consideration so established is adequate.
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Appendix A- Plan of Merger
C. Transfers. Shares may be transferred by delivery of the certificate,
accompanied either by an assignment in writing on the back of the
certificate, or by a written power of attorney to sell, assign and
transfer the same, signed by the record holder of the certificate.
Except as otherwise specifically provided in these Bylaws, no shares
of stock shall be transferred on the books of the Corporation until
the outstanding certificate therefor has been surrendered to the
Corporation.
D. Loss or Destruction of Certificates. In the event of the loss or
destruction of any certificate, a new certificate may be issued in
lieu thereof upon satisfactory proof of such loss or destruction, and
upon the giving of security against loss to the Corporation by bond,
indemnity or otherwise, to the extent deemed necessary by the Board of
Directors, the Secretary, or the Treasurer.
E. Fixing Record Date. The Board of Directors may fix in advance a date
as the record date for determining shareholders entitled: (i) to
notice of or to vote at any shareholders' meeting or any adjournment
thereof; (ii) to receive payment of any share dividend; or (iii) to
receive payment of any distribution. The Board of Directors may in
addition fix record dates with respect to any allotment of rights or
conversion or exchange of any securities by their terms, or for any
other proper purpose, as determined by the Board of Directors and by
law. The record date shall be not more than 70 days and, in case of a
meeting of shareholders, not less than 10 days (or such longer period
as may be required by Washington law or applicable federal securities
law or the rules of any exchange or automated quotation system on
which shares of the Corporation are listed or quoted) prior to the
date on which the particular action requiring determination of
shareholders is to be taken. If no record date is fixed for
determining the shareholders entitled to notice of or to vote at a
meeting of shareholders, the record date shall be the date before the
day on which notice of the meeting is mailed. If no record date is
fixed for the determination of shareholders entitled to a distribution
(other than one involving a purchase, redemption, or other acquisition
of the Corporation's own shares), the record date shall be the date on
which the Board adopted the resolution declaring the distribution. If
no record date is fixed for determining shareholders entitled to a
share dividend, the record date shall be the date on which the Board
of Directors authorized the dividend.
V.
BOOKS, RECORDS AND REPORTS
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Appendix A- Plan of Merger
A. Records of Corporate Meetings, Accounting Records and Share Registers.
The Corporation shall keep, as permanent records, minutes of all
meetings of the Board of Directors and shareholders, and all actions
taken without a meeting, and all actions taken by a committee
exercising the authority of the Board of Directors. The Corporation or
its agent shall maintain, in a form that permits preparation of a
list, a list of the names and addresses of its shareholders, in
alphabetical order by class of shares, and the number, class, and
series, if any, of shares held by each. The Corporation shall also
maintain appropriate accounting records, and at its principal place of
business shall keep copies of: (a) its Articles of Incorporation or
restated Articles of Incorporation and all amendments in effect; (b)
its Bylaws or restated Bylaws and all amendments in effect; (c)
minutes of all shareholders' meetings and records of all actions taken
without meetings for the past three years; (d) the year-end balance
sheets and income statements for the past three fiscal years, prepared
as required by Washington law; (e) all written communications to
shareholders generally in the past three years; (f) a list of the
names and business addresses of its current officers and directors;
and (g) its most recent annual report to the Secretary of State.
B. Copies of Corporate Records. Any person dealing with the Corporation
may rely upon a copy of any of the records of the proceedings,
resolutions, or votes of the Board of Directors or shareholders, when
certified by the Chairman of the Board, Chief Executive Officer,
President, Vice President, Secretary or Assistant Secretary.
C. Examination of Records. A shareholder shall have the right to inspect
and copy, during regular business hours at the principal office of the
Corporation, in person or by his or her attorney or agent, the
corporate records referred to in the last sentence of Section 5.1 of
these Bylaws if the shareholder gives the Corporation written notice
of the demand at least five business days before the date on which the
shareholder wishes to make such inspection. In addition, if a
shareholder's demand is made in good faith and for a proper purpose, a
shareholder may inspect and copy, during regular business hours at a
reasonable location specified by the Corporation, excerpts from
minutes of any meeting of the Board of Directors, records of any
action of a committee of the Board of Directors, records of actions
taken by the Board of Directors without a meeting, minutes of
shareholders' meetings held or records of action taken by shareholders
without a meeting not within the past three years, accounting records
of the Corporation, or the record of shareholders; provided that the
shareholder shall have made a demand describing with reasonable
particularity the shareholder's purpose and the records the
shareholder desires to inspect, and provided further that the records
are directly connected to the shareholder's purpose. This section
shall not affect any right of shareholders to inspect records of the
Corporation that may be otherwise granted to the shareholders by law.
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Appendix A- Plan of Merger
D. Financial Statements. Not later than four months after the end of each
fiscal year, or in any event prior to its annual meeting of
shareholders, the Corporation shall prepare a balance sheet and income
statement in accordance with Washington law. The Corporation shall
furnish a copy of each to any shareholder upon written request.
VI.
FISCAL YEAR
The fiscal year of the Corporation shall be as set forth in Exhibit A.
VII.
CORPORATE SEAL
The corporate seal of the Corporation, if any, shall be in the form
shown on Exhibit A.
VIII.
MISCELLANEOUS PROCEDURAL PROVISIONS
The Board of Directors may adopt rules of procedure to govern any
meetings of shareholders or directors to the extent not inconsistent with
law, the Corporation's Articles of Incorporation, or these Bylaws, as they
are in effect from time to time. In the absence of any rules of procedure
adopted by the Board of Directors, the chairman of the meeting shall make
all decisions regarding the procedures for any meeting.
IX.
AMENDMENT OF BYLAWS
The Board of Directors is expressly authorized to make, alter and
repeal the Bylaws of the Corporation, subject to the power of the
shareholders of the Corporation to change or repeal the Bylaws.
X.
INDEMNIFICATION OF DIRECTORS AND OTHERS
A. Grant of Indemnification. Subject to Section 10.2, each person who was
or is made a party or is threatened to be made a party to or is
involved (including, without
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Appendix A- Plan of Merger
limitation, as a witness) in any threatened, pending, or completed
action, suit or proceeding, whether formal or informal, civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation or who, while a director or
officer of the Corporation, is or was serving at the request of the
Corporation as a director, officer, employee or agent of this or
another corporation or of a partnership, joint venture, trust, other
enterprise, or employee benefit plan, whether the basis of such
proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by applicable law, as then
in effect, against all expense, liability and loss (including
attorneys' fees, costs, judgments, fines, ERISA excise taxes or
penalties and amounts to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of his or her
heirs, executors and administrators.
B. Limitations on Indemnification. Notwithstanding Section 10.1, no
indemnification shall be provided hereunder to any such person to the
extent that such indemnification would be prohibited by the Washington
Business Corporation Act or other applicable law as then in effect,
nor, except as provided in Section 10.4 with respect to proceedings
seeking to enforce rights to indemnification, shall the Corporation
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person except where
such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
C. Advancement of Expenses. The right to indemnification conferred in
this section shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its
final disposition, except where the Board of Directors shall have
adopted a resolution expressly disapproving such advancement of
expenses. Such an advancement of expenses shall be made upon delivery
to the Corporation of an undertaking, by or on behalf of the claimant,
to repay all amounts so advanced if it shall ultimately be determined
by final judicial decision from which there is no further right to
appeal that such claimant is not entitled to be indemnified for such
expenses under this Section 10.3.
D. Right to Enforce Indemnification. If a claim under Section 10.1 is not
paid in full by the Corporation within 60 days after a written claim
has been received by the Corporation, or if a claim for expenses
incurred in defending a proceeding in advance of its final disposition
authorized under Section 10.3 is not paid within 20 days after a
written claim has been received by the Corporation, the claimant may
at any time
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Appendix A- Plan of Merger
thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, to the extent successful in whole or in part,
the claimant shall be entitled to be paid also the expense of
prosecuting such claim. The claimant shall be presumed to be entitled
to indemnification hereunder upon submission of a written claim (and,
in an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where
the required undertaking has been tendered to the Corporation), and
thereafter the Corporation shall have the burden of proof to overcome
the presumption that the claimant is so entitled. It shall be a
defense to any such action (other than an action with respect to
expenses authorized under Section 10.3) that the claimant has not met
the standards of conduct which make it permissible hereunder or under
the Washington Business Corporation Act for the Corporation to
indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, independent
legal counsel, or its shareholders) to have made a determination prior
to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in
the circumstances because he or she has met the applicable standard of
conduct set forth herein or in the Washington Business Corporation Act
nor (except as provided in Section 10.3) an actual determination by
the Corporation (including its Board of Directors, independent legal
counsel, or its shareholders) that the claimant is not entitled to
indemnification or to the reimbursement or advancement of expenses
shall be a defense to the action or create a presumption that the
claimant is not so entitled.
E. Nonexclusivity. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section shall be valid to the extent
consistent with Washington law.
F. Indemnification of Employees and Agents. The Corporation may, by
action of its Board of Directors from time to time, provide
indemnification and pay expenses in advance of the final disposition
of a proceeding to employees and agents of the Corporation on the same
terms and with the same scope and effect as the provisions of this
section with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation or pursuant to
rights granted pursuant to, or provided by, the Washington Business
Corporation Act or on such other terms as the Board may deem proper.
G. Insurance and Other Security. The Corporation may maintain insurance,
at its expense, to protect itself and any individual who is or was a
director, officer, employee or agent of the Corporation or another
Corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against or incurred by
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Appendix A- Plan of Merger
the individual in that capacity or arising from his or her status as
an officer, director, agent, or employee, whether or not the
Corporation would have the power to indemnify such person against the
same liability under the Washington Business Corporation Act. The
Corporation may enter into contracts with any director or officer of
the Corporation in furtherance of the provisions of this section and
may create a trust fund, grant a security interest or use other means
(including, without limitation, a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification
as provided in this section.
H. Amendment or Modification. This section may be altered or amended at
any time as provided in these Bylaws, but no such amendment shall have
the effect of diminishing the rights of any person who is or was an
officer or director as to any acts or omissions taken or omitted to be
taken prior to the effective date of such amendment.
I. Effect of Section. The rights conferred by this section shall be
deemed to be contract rights between the Corporation and each person
who is or was a director or officer. The Corporation expressly intends
each such person to rely on the rights conferred hereby in performing
his or her respective duties on behalf of the Corporation.
XI.
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
Unless otherwise restricted by the Board of Directors, the Chairman,
Chief Executive Officer, President, and any Vice President of the
Corporation are each authorized to vote, represent and exercise on behalf
of the Corporation all rights incident to any and all shares of other
corporations standing in the name of the Corporation. This authority may be
exercised by such officers either in person or by a duly executed proxy or
power of attorney.
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Appendix A- Plan of Merger
EXHIBIT A
Section 1.1. Date and time of annual shareholders' meeting: First
Wednesday in June at 10:00 a.m.
Section 2.1. Number of members of Board of Directors, unless and
until changed by resolution of the Board of Directors: Six
Section 6. Fiscal year: December 31
Section 7. Corporate Seal: None.
Date Bylaws Adopted: ____________________, 1996
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Appendix B
UTAH CODE, 1953
TITLE 16. CORPORATIONS
CHAPTER 10a. REVISED BUSINESS CORPORATION ACT
PART 13. DISSENTERS' RIGHTS
16-10a-1301 Definitions.
For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 16-10a-1302 and who exercises that right
when and in the manner required by Sections 16-10a-1320 through
16-10a-1328.
(4) "Fair value" with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the statutory rate set forth in
Section 15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares that are registered in the name of a nominee to the extent the
beneficial owner is recognized by the corporation as the shareholder as
provided in Section 16-10a-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10a-1302 Right to dissent.
(1) A shareholder, whether or not entitled to vote, is entitled to
dissent from, and obtain payment of the fair value of shares held by him in
the event of, any of the following corporate actions:
(a) consummation of a plan of merger to which the corporation is a
party if:
(i) shareholder approval is required for the merger by Section 16-10a-
1103 or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its parent
under Section 16-10a-1104;
(b) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under Subsection 16-10a-1202(1), but not
including a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote
upon the consent of the corporation to the disposition pursuant to
Subsection 16-10a-1202(2).
(2) A shareholder is entitled to dissent and obtain payment of the
fair value of his shares in the event of any other corporate action to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors so provides.
(3) Notwithstanding the other provisions of this part, except to the
extent otherwise provided in the articles of incorporation, bylaws, or a
resolution of the board of directors, and subject to the limitations set
forth in Subsection (4), a shareholder is not entitled to dissent and
obtain payment under Subsection (1) of the fair value of the shares of any
class or series of shares which either were listed on a national securities
exchange registered under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of
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Appendix B - Utah Business Corporation Act
Part 13 - 2 -
the National Association of Securities Dealers Automated Quotation System,
or were held of record by more than 2,000 shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at
which the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10a-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action
is authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the
shareholder will receive for his shares, pursuant to the corporate action,
anything except:
(a) shares of the corporation surviving the consummation of the plan
of merger or share exchange;
(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities
exchange registered under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of the National Association of
Securities Dealers Automated Quotation System, or will be held of record by
more than 2,000 shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash
in lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his
shares under this part may not challenge the corporate action creating the
entitlement unless the action is unlawful or fraudulent with respect to him
or to the corporation.
16-10a-1303 Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if the shareholder dissents
with respect to all shares beneficially owned by any one person and causes
the corporation to receive written notice which states the dissent and the
name and address of each person on whose behalf dissenters' rights are
being asserted. The rights of a partial dissenter under this subsection are
determined as if the shares as to which the shareholder dissents and the
other shares held of record by him were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of
which he is the beneficial shareholder.
(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each beneficial shareholder must certify to the corporation
that both he and the record shareholders of all shares owned beneficially
by him have asserted, or will timely assert, dissenters' rights as to all
the shares unlimited on the ability to exercise dissenters' rights. The
certification requirement must be stated in the dissenters' notice given
pursuant to Section 16-10a-1322.
16-10a-1320 Notice of dissenters' rights.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to
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Appendix B - Utah Business Corporation Act
Part 13 - 3 -
a vote at a shareholders' meeting, the meeting notice must be sent to all
shareholders of the corporation as of the applicable record date, whether
or not they are entitled to vote at the meeting. The notice shall state
that shareholders are or may be entitled to assert dissenters' rights under
this part. The notice must be accompanied by a copy of this part and the
materials, if any, that under this chapter are required to be given the
shareholders entitled to vote on the proposed action at the meeting.
Failure to give notice as required by this subsection does not affect any
action taken at the shareholders' meeting for which the notice was to have
been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders
pursuant to Section 16-10a-704, any written or oral solicitation of a
shareholder to execute a written consent to the action contemplated by
Section 16-10a-704 must be accompanied or preceded by a written notice
stating that shareholders are or may be entitled to assert dissenters'
rights under this part, by a copy of this part, and by the materials, if
any, that under this chapter would have been required to be given to
shareholders entitled to vote on the proposed action if the proposed action
were submitted to a vote at a shareholders' meeting. Failure to give
written notice as provided by this subsection does not affect any action
taken pursuant to Section 16-10a-704 for which the notice was to have been
given.
16-10a-1321 Demand for payment -- Eligibility and notice of intent.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed
action is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders
pursuant to Section 16-10a-704, a shareholder who wishes to assert
dissenters' rights may not execute a writing consenting to the proposed
corporate action.
(3) In order to be entitled to payment for shares under this part,
unless otherwise provided in the articles of incorporation, bylaws, or a
resolution adopted by the board of directors, a shareholder must have been
a shareholder with respect to the shares for which payment is demanded as
of the date the proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is approved by the shareholders, if shareholder
approval is required, or as of the effective date of the corporate action
if the corporate action is authorized other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of Subsections
(1) through (3) is not entitled to payment for shares under this part.
16-10a-1322 Dissenters' notice.
(1) If proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment
for their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no
later than ten days after the effective date of the corporate action
creating dissenters' rights under Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the effective
date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment
demands and an address at which certificates for certificated shares must
be deposited;
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Appendix B - Utah Business Corporation Act
Part 13 - 4 -
(c) inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(d) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment
demand and by which certificates for certificated shares must be deposited
at the address indicated in the dissenters' notice, which dates may not be
fewer than 30 nor more than 70 days after the date the dissenters' notice
required by Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-10a-1303(3),
if the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323 Procedure to demand payment.
(1) A shareholder who is given a dissenters' notice described in
Section 16-10a-1322, who meets the requirements of Section 16-10a-1321, and
wishes to assert dissenters' rights must, in accordance with the terms of
the dissenters' notice:
(a) cause the corporation to receive a payment demand, which may be
the payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly
completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in accordance
with the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described
in Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in
writing, in or with the payment demand, whether or not he or the person on
whose behalf he asserts dissenters' rights acquired beneficial ownership of
the shares before the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with Subsection
(1) retains all rights of a shareholder except the right to transfer the
shares until the effective date of the proposed corporate action giving
rise to the exercise of dissenters' rights and has only the right to
receive payment for the shares after the effective date of the corporate
action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters'
notice, is not entitled to payment for shares under this part.
16-10a-1324 Uncertificated shares.
(1) Upon receipt of a demand for payment under Section 16-10a-1323
from a shareholder holding uncertificated shares, and in lieu of the
deposit of certificates representing the shares, the corporation may
restrict the transfer of the shares until the proposed corporate action is
taken or the restrictions are released under Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-10a-1323 apply
to shareholders who own uncertificated shares.
16-10a-1325 Payment.
(1) Except as provided in Section 16-10a-1327, upon the later of the
effective date of the corporate action creating dissenters' rights under
Section 16-10a-1302, and receipt by the corporation of each payment demand
pursuant to Section 16-10a-1323, the corporation shall pay the amount the
corporation estimates to be
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Appendix B - Utah Business Corporation Act
Part 13 - 5 -
the fair value of the dissenter's shares, plus interest to each dissenter
who has complied with Section 16-10a-1323, and who meets the requirements
of Section 16-10a-1321, and who has not yet received payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied
by:
(a) (i) (A) the corporation's balance sheet as of the end of its most
recent fiscal year, or if not available, a fiscal year ending not more than
16 months before the date of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that year and a
statement of cash flow for that year, if the corporation customarily
provides such statements to shareholders; and
(D) the latest available interim financial statements, if any;
(ii) the balance sheet and statements referred to in Subsection (i)
must be audited if the corporation customarily provides audited financial
statements to shareholders;
(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under
Section 16-10a-1328; and
(d) a copy of this part.
16-10a-1326 Failure to take action.
(1) If the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302 does not occur within 60 days after the
date set by the corporation as the date by which the corporation must
receive payment demands as provided in Section 16-10a-1322, the corporation
shall return all deposited certificates and release the transfer
restrictions imposed on uncertificated shares, and all shareholders who
submitted a demand for payment pursuant to Section 16-10a-1323 shall
thereafter have all rights of a shareholder as if no demand for payment had
been made.
(2) If the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302 occurs more than 60 days after the date
set by the corporation as the date by which the corporation must receive
payment demands as provided in Section 16-10a-1322, then the corporation
shall send a new dissenters' notice, as provided in Section 16-10a-1322,
and the provisions of Sections 16-10a-1323 through 16-10a-1328 shall again
be applicable.
16-10a-1327 Special provisions relating to shares acquired after
announcement of proposed corporate action.
(1) A corporation may, with the dissenters' notice given pursuant to
Section 16-10a-1322, state the date of the first announcement to news media
or to shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10a-1302 and state that a shareholder
who asserts dissenters' rights must certify in writing, in or with the
payment demand, whether or not he or the person on whose behalf he asserts
dissenters' rights acquired beneficial ownership of the shares before that
date. With respect to any dissenter who does not certify in writing, in or
with the payment demand that he or the person on whose behalf the
dissenters' rights are being asserted, acquired beneficial ownership of the
shares before that date, the corporation may, in lieu of making the payment
provided in Section 16-10a-1325, offer to make payment if the dissenter
agrees to accept it in full satisfaction of his demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10a-1325(2).
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Appendix B - Utah Business Corporation Act
Part 13 - 6 -
16-10a-1328 Procedure for shareholder dissatisfied with payment or offer.
(1) A dissenter who has not accepted an offer made by a corporation
under Section 16-10a-1327 may notify the corporation in writing of his own
estimate of the fair value of his shares and demand payment of the
estimated amount, plus interest, less any payment made under Section
16-10a-1325, if:
(a) the dissenter believes that the amount paid under Section
16-10a-1325 or offered under Section 16-10a-1327 is less than the fair
value of the shares;
(b) the corporation fails to make payment under Section 16-10a-1325
within 60 days after the date set by the corporation as the date by which
it must receive the payment demand; or
(c) the corporation, having failed to take the proposed corporate
action creating dissenters' rights, does not return the deposited
certificates or release the transfer restrictions imposed on uncertificated
shares as required by Section 16-10a-1326.
(2) A dissenter waives the right to demand payment under this section
unless he causes the corporation to receive the notice required by
Subsection (1) within 30 days after the corporation made or offered payment
for his shares.
16-10a-1330 Judicial appraisal of shares -- Court action.
(1) If a demand for payment under Section 16-10a-1328 remains
unresolved, the corporation shall commence a proceeding within 60 days
after receiving the payment demand contemplated by Section 16-10a-1328, and
petition the court to determine the fair value of the shares and the amount
of interest. If the corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unresolved
the amount demanded.
(2) The corporation shall commence the proceeding described in
Subsection (1) in the district court of the county in this state where the
corporation's principal office, or if it has no principal office in this
state, the county where its registered office is located. If the
corporation is a foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in this state where
the registered office of the domestic corporation merged with, or whose
shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether
or not they are residents of this state whose demands remain unresolved,
parties to the proceeding commenced under Subsection (2) as an action
against their shares. All such dissenters who are named as parties must be
served with a copy of the petition. Service on each dissenter may be by
registered or certified mail to the address stated in his payment demand
made pursuant to Section 16- 10a-1328. If no address is stated in the
payment demand, service may be made at the address stated in the payment
demand given pursuant to Section 16-10a-1323. If no address is stated in
the payment demand, service may be made at the address shown on the
corporation's current record of shareholders for the record shareholder
holding the dissenter's shares. Service may also be made otherwise as
provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under Subsection (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil
proceedings.
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair
value of his shares, plus interest, exceeds the amount paid by the
corporation pursuant to Section 16-10a-1325; or
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Part 13 - 7 -
(b) for the fair value, plus interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under Section 16-10a-1327.
16-10a-1331 Court costs and counsel fees.
(1) The court in an appraisal proceeding commenced under Section
16-10a-1330 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court.
The court shall assess the costs against the corporation, except that the
court may assess costs against all or some of the dissenters, in amounts
the court finds equitable, to the extent the court finds that the
dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 16-10a-1328.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 16-10a-1320 through 16-10a-1328; or
(b) against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and
that the fees for those services should not be assessed against the
corporation, the court may award to those counsel reasonable fees to be
paid out of the amounts awarded the dissenters who were benefited.
<PAGE>
APPENDIX C
TELEVAR , INC.
1996 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this 1996 Stock Incentive Plan (the "Plan")
is to enable TELEVAR , INC., a Washington corporation (the "Company") to
attract and retain the services of (1) selected employees, officers and
directors of the Company or of any subsidiary of the Company and (2)
selected nonemployee agents, consultants, advisors, persons involved in the
sale or distribution of the Company's products and independent contractors
of the Company or any subsidiary.
2. Shares Subject to the Plan. Subject to adjustment as provided below
and in Section 13, the shares to be offered under the Plan shall consist of
Common Stock, $.01 par value, of the Company, and the total number of
shares of Common Stock that may be issued under the Plan shall not exceed
1,000,000 shares. The shares issued under the Plan may be authorized and
unissued shares or reacquired shares. If an option, stock appreciation
right or performance unit granted under the Plan expires, terminates or is
cancelled, the unissued shares subject to such option, stock appreciation
right or performance unit shall again be available under the Plan. If
shares sold or awarded as a bonus under the Plan are forfeited to the
Company or repurchased by the Company, the number of shares forfeited or
repurchased shall again be available under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. The Plan shall become effective as of the
date it is adopted by the Board of Directors. No option, stock appreciation
right or performance unit granted under the Plan to an officer who is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended
(an "Officer") or a director, and no incentive stock option, shall become
exercisable, however, until the Plan is approved by the affirmative vote of
the holders of a majority of the shares of Common Stock represented at a
shareholders meeting at which a quorum is present, and any such awards
under the Plan prior to such approval shall be conditioned on and subject
to such approval. Subject to this limitation, options, stock appreciation
rights and performance units may be granted and shares may be awarded as
bonuses or sold under the Plan at any time after the effective date and
before termination of the Plan.
(b) Duration. Unless earlier terminated by the Board of
Directors, the Plan shall continue in effect until the earlier of: (i) ten
years from the date on which the Plan is adopted by the Board of Directors,
and (ii) the date on which all shares available for issuance under the Plan
have been issued and all restrictions on such shares have lapsed. The Board
of Directors may suspend or terminate the Plan at any time except with
respect to options, performance units and shares subject to restrictions
then outstanding under the Plan. No options or other rights may be granted
after such termination or during any suspension of the Plan. Termination
shall not affect any outstanding options, any right of the Company to
repurchase shares or the forfeitability of shares issued under the Plan.
4. Administration.
(a) Board of Directors. Except as otherwise provided below, the
Plan shall be
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Appendix C - 1996 Stock Incentive Plan
administered by the Board of Directors of the Company, which shall
determine and designate from time to time the individuals to whom awards
shall be made, the amount of the awards and the other terms and conditions
of the awards. Subject to the provisions of the Plan, the Board of
Directors may from time to time adopt and amend rules and regulations
relating to administration of the Plan, advance the lapse of any waiting
period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make
all other determinations in the judgment of the Board of Directors
necessary or desirable for the administration of the Plan. The
interpretation and construction of the provisions of the Plan and related
agreements by the Board of Directors shall be final and conclusive. The
Board of Directors may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any related agreement in the
manner and to the extent it shall deem expedient to carry the Plan into
effect, and it shall be the sole and final judge of such expediency.
(b) Committee. The Board of Directors may delegate to a committee
of the Board of Directors or specified officers of the Company, or both
(the "Committee") any or all authority for administration of the Plan;
provided that at least two members of the Committee must be directors. If
authority is delegated to a Committee, all references to the Board of
Directors in the Plan shall mean and relate to the Committee except (i) as
otherwise provided by the Board of Directors, (ii) that only the Board of
Directors may amend or terminate the Plan as provided in Sections 3 and 14,
and (iii) that a Committee including officers of the Company shall not be
permitted to grant options to persons who are officers of the Company.
(c) Exchange Act. At any time that the Company has a class of
securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), this Plan shall be administered
in accordance with Rule 16b-3 adopted under the Exchange Act and Section
162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations, proposed and final, thereunder, as all may be amended from
time to time. In such event, the Board shall appoint a Committee in
accordance with Section 4(b), and each member of the Committee shall be a
"disinterested director" and an "outside director" with the meaning of such
Rule 16b-3 and Section 162(m), respectively.
(d) Limited Liability. No member of the Board of Directors or the
Committee or officer of the Company shall be liable for any action or
inaction of the entity or body, or of another person or, except in
circumstances involving bad faith, of himself or herself. Subject only to
compliance with the explicit provisions hereof, the Board of Directors may
act in its absolute discretion in all matters related to the Plan.
5. Types of Awards; Eligibility. The Board of Directors may, from time
to time, take the following action, separately or in combination, under the
Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in
Sections 6(a) and 6(b); (ii) grant options other than Incentive Stock
Options ("Non-Statutory Stock Options") as provided in Sections 6(a) and
6(c); (iii) award stock bonuses as provided in Section 7; (iv) sell shares
subject to restrictions as provided in Section 8; (v) grant stock
appreciation rights as provided in Section 9; (vi) grant cash bonus rights
as provided in Section 10; (vii) grant performance units as provided in
Section 11; and (viii) grant foreign qualified awards as provided in
Section 12. Any such awards may be made to employees, including employees
who are
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Appendix C - 1996 Stock Incentive Plan
officers or directors, and to other individuals described in Section 1 who
the Board of Directors believes have made or will make an important
contribution to the Company or any subsidiary of the Company; provided,
however, that only employees of the Company shall be eligible to receive
Incentive Stock Options under the Plan; and provided further that
non-employee directors shall not be eligible to participate in the Plan.
For purposes of the Plan, a non-employee director is a director who is not
an employee of the Company or any of its subsidiaries. The Board of
Directors shall select the individuals to whom awards shall be made and
shall specify the action taken with respect to each individual to whom an
award is made. At the discretion of the Board of Directors, an individual
may be given an election to surrender an award in exchange for the grant of
a new award.
6. Option Grants.
(a) General Rules Relating to Options.
(i) Terms of Grant. The Board of Directors may grant options
under the Plan. With respect to each option grant, the Board of
Directors shall determine the number of shares subject to the option,
the option price, the period of the option, the time or times at which
the option may be exercised (including, without limitation, whether
the option will be subject to any vesting requirements and whether
there will be any conditions precedent to exercise of the option), and
whether the option is an Incentive Stock Option or a Non-Statutory
Stock Option. At the time of the grant of an option or at any time
thereafter, the Board of Directors may provide that an optionee who
exercised an option with Common Stock of the Company shall
automatically receive a new option to purchase additional shares equal
to the number of shares surrendered and may specify the terms and
conditions of such new options.
(ii) Exercise of Options. Except as provided in Section
6(a)(iv) or as determined by the Board of Directors, no option granted
under the Plan may be exercised unless at the time of such exercise
the optionee is employed by or in the service of the Company or any
subsidiary of the Company and shall have been so employed or provided
such service continuously since the date such option was granted,
subject to Section 6(a)(iv)(G). Except as provided in Sections
6(a)(iv) and 13, options granted under the Plan may be exercised from
time to time over the period stated in each option in such amounts and
at such times as shall be prescribed by the Board of Directors,
provided that options shall not be exercised for fractional shares.
Unless otherwise determined by the Board of Directors, if the optionee
does not exercise an option in any one year with respect to the full
number of shares to which the optionee is entitled in that year, the
optionee's rights shall be cumulative and the optionee may purchase
those shares in any subsequent year during the term of the option.
Unless otherwise determined by the Board of Directors, if an Officer
exercises an option within six months of the grant of the option, the
shares acquired upon exercise of the option may not be sold until six
months after the date of grant of the option.
(iii) Nontransferability. Each Incentive Stock Option and,
unless otherwise determined by the Board of Directors with respect to
an option granted to a person who is neither an Officer nor a director
of the Company, each other option granted under the Plan, by its terms
shall be nonassignable and nontransferable by the optionee, either
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Appendix C - 1996 Stock Incentive Plan
voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or country of the optionee's
domicile at the time of death.
(iv) Termination of Employment or Service.
(A) General Rule. Unless otherwise determined by the
Board of Directors, in the event the employment or service of the
optionee with the Company or a subsidiary terminates for any
reason other than because of physical disability or death as
provided in Subsections 6(a)(iv)(B) and (C), or for cause, as
provided in Subsection 6(a)(iv)(D), the option may be exercised
at any time prior to the expiration date of the option or the
expiration of three months after the date of such termination,
whichever is the shorter period, but only if and to the extent
the optionee was entitled to exercise the option at the date of
such termination.
(B) Termination Because of Total Disability. Unless
otherwise determined by the Board of Directors, in the event of
the termination of employment or service because of total
disability, the option may be exercised at any time prior to the
expiration date of the option or the expiration of 12 months
after the date of such termination, whichever is the shorter
period, but only if and to the extent the optionee was entitled
to exercise the option at the date of such termination. The term
"total disability" means a medically determinable mental or
physical impairment which is expected to result in death or which
has lasted or is expected to last for a continuous period of 12
months or more and which causes the optionee to be unable, in the
opinion of the Company and two independent physicians, to perform
his or her duties as an employee, director, officer or consultant
of the Company and to be engaged in any substantial gainful
activity. Total disability shall be deemed to have occurred on
the first day after the Company and the two independent
physicians have furnished their opinion of total disability to
the Company.
(C) Termination Because of Death. Unless otherwise
determined by the Board of Directors, in the event of the death
of an optionee while employed by or providing service to the
Company or a subsidiary, the option may be exercised at any time
prior to the expiration date of the option or the expiration of
12 months after the date of death, whichever is the shorter
period, but only if and to the extent the optionee was entitled
to exercise the option at the date of death and only by the
person or persons to whom such optionee's rights under the option
shall pass by the optionee's will or by the laws of descent and
distribution of the state or country of domicile at the time of
death.
(D) For Cause. Unless otherwise determined by the Board
of Directors, if an optionee is terminated for cause or resigns
in lieu of dismissal, any option granted hereunder shall be
deemed to have terminated as of the time of the first act that
led or would have led to the termination for cause or resignation
in lieu of dismissal, and such optionee shall thereupon have no
right to purchase any shares of Common Stock pursuant to the
exercise of such option, and any such exercise shall be null and
void. Termination for "cause" shall include: (i) the violation by
the optionee of any reasonable rule or policy of the Company that
results in damage to
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Appendix C - 1996 Stock Incentive Plan
the Company or which, after notice to do so, the optionee fails
to correct within a reasonable time; (ii) any willful misconduct
or gross negligence by the optionee in the responsibilities
assigned to him or her; (iii) any willful failure to perform his
or her job as required to meet the objectives of the Company;
(iv) any wrongful conduct of an optionee that has an adverse
impact on the Company or that constitutes a misappropriation of
the assets of the Company; (v) unauthorized disclosure of
confidential information; or (vi) the optionee's performing
services for any other company or person that competes with the
Company while he or she is employed by or provides services to
the Company, without the written approval of the chief executive
officer of the Company. "Resignation in lieu of dismissal" shall
mean a resignation by an optionee of employment with or service
to the Company if (i) the Company has given prior notice to such
optionee of its intent to dismiss the optionee for circumstances
that constitute cause, or (ii) within two months of the
optionee's resignation, the chief operating officer or the chief
executive officer of the Company or the Board of Directors
determines, which determination shall be final and binding, that
such resignation was related to an act that would have led to a
termination for cause.
(E) Amendment of Exercise Period Applicable to
Termination. The Board of Directors, at the time of grant or,
with respect to an option that is not an Incentive Stock Option,
at any time thereafter, may extend the 3-month and 12-month
exercise periods any length of time not longer than the original
expiration date of the option, and may increase the portion of an
option that is exercisable, subject to such terms and conditions
as the Board of Directors may determine.
(F) Failure to Exercise Option. To the extent that the
option of any deceased optionee or of any optionee whose
employment or service terminates is not exercised within the
applicable period, all further rights to purchase shares pursuant
to such option shall cease and terminate.
(G) Transfers; Leaves. For purposes of this Section
6(a), a transfer of employment or other relationship between or
among the Company and/or any of its subsidiaries shall not be
deemed to constitute a termination of employment or other
cessation of relationship with the Company or any of its
subsidiaries. For purposes of this Section 6(a), unless otherwise
determined by the Board of Directors, employment shall be deemed
to continue while the optionee is on military leave, sick leave
or other bona fide leave of absence (as determined by the Board
of Directors) in accordance with the policies of the Company.
(H) Holding Period. Unless otherwise determined by the
Board of Directors, if a person subject to Section 16 of the
Exchange Act exercises an option within six months of the date of
grant of the option, the shares of Common Stock acquired on
exercise of the option may not be sold until six months after the
date of grant of the option.
(I) Modification of Options. Subject to the
requirements of Section 422 of the Code (with respect to
Incentive Stock Options) and to the terms
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Appendix C - 1996 Stock Incentive Plan
and conditions and within the limitations of the Plan, the Board
of Directors may modify or amend outstanding options granted
under the Plan. The modification or amendment of an outstanding
option shall not, without the consent of the optionee, impair or
diminish any of his or her rights or any of the obligations of
the Company under such option. Except as otherwise provided in
the Plan, no outstanding option shall be terminated without the
consent of the optionee. Unless the optionee agrees otherwise,
any changes or adjustments made to outstanding Incentive Stock
Options granted under this Plan shall be made in such a manner so
as not to constitute a "modification," as defined in Section
425(h) of the Code, and so as not to cause any Incentive Stock
Option issued hereunder to fail to continue to qualify as an
Incentive Stock Option as defined in Section 422(b) of the Code.
(v) Purchase of Shares. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an option
granted under the Plan only upon receipt by the Company of notice in
writing from the optionee of the optionee's intention to exercise,
specifying the number of shares as to which the optionee desires to
exercise the option and the date on which the optionee desires to
complete the transaction, and if required in order to comply with the
Securities Act of 1933, as amended, containing a representation that
it is the optionee's present intention to acquire the shares for
investment and not with a view to distribution. Unless the Board of
Directors determines otherwise, on or before the date specified for
completion of the purchase of shares pursuant to an option, the
optionee must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Board of Directors,
cash that may be the proceeds of a loan from the Company (provided
that, with respect to an Incentive Stock Option, such loan is approved
at the time of option grant)) or, with the consent of the Board of
Directors, in whole or in part, in Common Stock of the Company valued
at fair market value, restricted stock, performance units or other
contingent awards denominated in either stock or cash, promissory
notes and other forms of consideration. The fair market value of
Common Stock provided in payment of the purchase price shall be
determined by the Board of Directors. If the Common Stock of the
Company is not publicly traded on the date the option is exercised,
the Board of Directors may consider any valuation methods it deems
appropriate and may, but is not required to, obtain one or more
independent appraisals of the Company. If the Common Stock of the
Company is publicly traded on the date the option is exercised, the
fair market value of Common Stock provided in payment of the purchase
price shall be the closing price of the Common Stock as reported in
The Wall Street Journal on the last trading day preceding the date the
option is exercised, or such other reported value of the Common Stock
as shall be specified by the Board of Directors. No shares shall be
issued until full payment for the shares has been made. With the
consent of the Board of Directors (which, in the case of an Incentive
Stock Option, shall be given only at the time of option grant), an
optionee may request the Company to apply automatically the shares to
be received upon the exercise of a portion of a stock option (even
though stock certificates have not yet been issued) to satisfy the
purchase price for additional portions of the option. Each optionee
who has exercised an option shall immediately upon notification of the
amount due, if any, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
requirements. If additional withholding is or becomes required beyond
any amount deposited before delivery of the certificates, the optionee
shall pay such amount to the Company on
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Appendix C - 1996 Stock Incentive Plan
demand. If the optionee fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to
the optionee, including salary, subject to applicable law. With the
consent of the Board of Directors an optionee may satisfy this
obligation, in whole or in part, by having the Company withhold from
the shares to be issued upon the exercise that number of shares that
would satisfy the withholding amount due or by delivering to the
Company Common Stock to satisfy the withholding amount. Upon the
exercise of an option, the number of shares reserved for issuance
under the Plan shall be reduced by the number of shares issued upon
exercise of the option.
(vi) Restrictions. Shares issued on exercise of options
granted under the Plan may be subject to restrictions on transfer,
repurchase rights, or other restrictions as determined by the Board of
Directors.
(b) Incentive Stock Options. Incentive Stock Options shall be
subject to the following additional terms and conditions:
(i) Limitation on Amount of Grants. No employee may be
granted Incentive Stock Options under the Plan if the aggregate fair
market value, on the date of grant, of the Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by
that employee during any calendar year under the Plan and under all
incentive stock option plans (within the meaning of Section 422 of the
Code) of the Company or any parent or subsidiary of the Company
exceeds $100,000.
(ii) Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an employee
possessing more than 10 percent of the total combined voting power of
all classes of stock of the Company or of any parent or subsidiary of
the Company only if the option price is at least 110 percent of the
fair market value, as described in Section 6(b)(iv), of the Common
Stock subject to the option on the date it is granted and the option
by its terms is not exercisable after the expiration of five years
from the date it is granted.
(iii) Duration of Options. Subject to Sections 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall
continue in effect for the period fixed by the Board of Directors,
except that no Incentive Stock Option shall be exercisable after the
expiration of 10 years from the date it is granted.
(iv) Option Price. The option price per share shall be
determined by the Board of Directors at the time of grant. Except as
provided in Section 6(b)(ii), the option price shall not be less than
100 percent of the fair market value of the Common Stock covered by
the Incentive Stock Option at the date the option is granted. The fair
market value shall be determined by the Board of Directors. If the
Common Stock of the Company is not publicly traded on the date the
option is granted, the Board of Directors may consider any valuation
methods it deems appropriate and may, but is not required to, obtain
one or more independent appraisals of the Company. If the Common Stock
of the Company is publicly traded on the date the option is exercised,
the fair market value shall be deemed to be the closing price of the
Common Stock as reported in The Wall Street Journal on the day
preceding the date the option is granted, or, if there has been no
sale on that date, on the last preceding date on
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Appendix C - 1996 Stock Incentive Plan
which a sale occurred or such other value of the Common Stock as shall
be specified by the Board of Directors.
(v) Limitation on Time of Grant. No Incentive Stock Option
shall be granted on or after the tenth anniversary of the effective
date of the Plan.
(vi) Conversion of Incentive Stock Options. The Board of
Directors may at any time without the consent of the optionee convert
an Incentive Stock Option to a Non-Statutory Stock Option.
(c) Non-Statutory Stock Options. Non-Statutory Stock Options
shall be subject to the following terms and conditions in addition to those
set forth in Section 6(a) above:
(i) Option Price. The option price for Non-Statutory Stock
Options shall be determined by the Board of Directors at the time of
grant and may be any amount determined by the Board of Directors.
(ii) Duration of Options. Non-Statutory Stock Options
granted under the Plan shall continue in effect for the period fixed
by the Board of Directors.
7. Stock Bonuses. The Board of Directors may award shares under the
Plan as stock bonuses. Shares awarded as a bonus shall be subject to the
terms, conditions, and restrictions determined by the Board of Directors.
The restrictions may include restrictions concerning transferability and
forfeiture of the shares awarded, together with such other restrictions as
may be determined by the Board of Directors. If shares are subject to
forfeiture, all dividends or other distributions paid by the Company with
respect to the shares shall be retained by the Company until the shares are
no longer subject to forfeiture, at which time all accumulated amounts
shall be paid to the recipient. The Board of Directors may require the
recipient to sign an agreement as a condition of the award, but may not
require the recipient to pay any monetary consideration other than amounts
necessary to satisfy tax withholding requirements. The agreement may
contain any terms, conditions, restrictions, representations and warranties
required by the Board of Directors. The certificates representing the
shares awarded shall bear any legends required by the Board of Directors.
Unless otherwise determined by the Board of Directors, shares awarded as a
stock bonus to an Officer may not be sold until six months after the date
of the award. The Company may require any recipient of a stock bonus to pay
to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the recipient,
including salary or fees for services, subject to applicable law. With the
consent of the Board of Directors, a recipient may deliver Common Stock to
the Company to satisfy this withholding obligation. Upon the issuance of a
stock bonus, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued.
8. Restricted Stock. The Board of Directors may issue shares under the
Plan for such consideration (including promissory notes and services) as
determined by the Board of Directors. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board
of Directors. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares
issued, together with such other restrictions
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Appendix C - 1996 Stock Incentive Plan
as may be determined by the Board of Directors. If shares are subject to
forfeiture or repurchase by the Company, all dividends or other
distributions paid by the Company with respect to the shares shall be
retained by the Company until the shares are no longer subject to
forfeiture or repurchase, at which time all accumulated amounts shall be
paid to the recipient. All Common Stock issued pursuant to this Section 8
shall be subject to a purchase agreement, which shall be executed by the
Company and the prospective recipient of the shares prior to the delivery
of certificates representing such shares to the recipient. The purchase
agreement may contain any terms, conditions, restrictions, representations
and warranties required by the Board of Directors. The certificates
representing the shares shall bear any legends required by the Board of
Directors. Unless otherwise determined by the Board of Directors, shares
issued under this Section 8 to an Officer may not be sold until six months
after the shares are issued. The Company may require any purchaser of
restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the
Company may withhold that amount from other amounts payable by the Company
to the purchaser, including salary, subject to applicable law. With the
consent of the Board of Directors, a purchaser may deliver Common Stock to
the Company to satisfy this withholding obligation. Upon the issuance of
restricted stock, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued.
9. Stock Appreciation Rights.
(a) Grant. Stock appreciation rights may be granted under the
Plan by the Board of Directors, subject to such rules, terms, and
conditions as the Board of Directors prescribes.
(b) Exercise.
(i) Each stock appreciation right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an
amount equal in value to the excess of the fair market value on the
date of exercise of one share of Common Stock of the Company over its
fair market value on the date of grant (or, in the case of a stock
appreciation right granted in connection with an option, the excess of
the fair market value of one share of Common Stock of the Company over
the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares
covered by the stock appreciation right or the option, or portion
thereof, that is surrendered. No stock appreciation right shall be
exercisable at a time that the amount determined under this
subparagraph is negative. Payment by the Company upon exercise of a
stock appreciation right may be made in Common Stock valued at fair
market value, in cash, or partly in Common Stock and partly in cash,
all as determined by the Board of Directors.
(ii) A stock appreciation right shall be exercisable only at
the time or times established by the Board of Directors. If a stock
appreciation right is granted in connection with an option, the
following rules shall apply: (1) the stock appreciation right shall be
exercisable only to the extent and on the same conditions that the
related option could be exercised; (2) the stock appreciation rights
shall be exercisable only when the fair market value of the stock
exceeds the option price of the related option; (3) the stock
appreciation right shall be for no more than 100 percent of the excess
of the fair market value of the stock
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Appendix C - 1996 Stock Incentive Plan
at the time of exercise over the option price; (4) upon exercise of
the stock appreciation right, the option or portion thereof to which
the stock appreciation right relates terminates; and (5) upon exercise
of the option, the related stock appreciation right or portion thereof
terminates. Unless otherwise determined by the Board of Directors, no
stock appreciation right granted to an Officer or director may be
exercised during the first six months following the date it is
granted.
(iii) The Board of Directors may withdraw any stock
appreciation right granted under the Plan at any time and may impose
any conditions upon the exercise of a stock appreciation right or
adopt rules and regulations from time to time affecting the rights of
holders of stock appreciation rights. Such rules and regulations may
govern the right to exercise stock appreciation rights granted prior
to adoption or amendment of such rules and regulations as well as
stock appreciation rights granted thereafter.
(iv) For purposes of this Section 9, the fair market value
of the Common Stock shall be determined as of the date the stock
appreciation right is exercised, under the methods set forth in
Section 6(b)(iv).
(v) No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an
amount equal to the value of the fraction or, if the Board of
Directors shall determine, the number of shares may be rounded
downward to the next whole share.
(vi) Each stock appreciation right granted in connection
with an Incentive Stock Option, and unless otherwise determined by the
Board of Directors with respect to a stock appreciation right granted
to a person who is neither an Officer nor a director of the Company,
each other stock appreciation right granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or country of the holder's
domicile at the time of death, and each stock appreciation right by
its terms shall be exercisable during the holder's lifetime only by
the holder.
(vii) Each participant who has exercised a stock
appreciation right shall, upon notification of the amount due, pay to
the Company in cash amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements. If the
participant fails to pay the amount demanded, the Company may withhold
that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the
consent of the Board of Directors a participant may satisfy this
obligation, in whole or in part, by having the Company withhold from
any shares to be issued upon the exercise that number of shares that
would satisfy the withholding amount due or by delivering Common Stock
to the Company to satisfy the withholding amount.
(viii) Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued. Cash payments of
stock appreciation rights shall not reduce the number of shares of
Common Stock reserved for issuance under the Plan.
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Appendix C - 1996 Stock Incentive Plan
10. Cash Bonus Rights.
(a) Grant. The Board of Directors may grant cash bonus rights
under the Plan in connection with (i) options granted or previously
granted, (ii) stock appreciation rights granted or previously granted,
(iii) stock bonuses awarded or previously awarded and (iv) shares sold or
previously sold under the Plan. Cash bonus rights will be subject to rules,
terms and conditions as the Board of Directors may prescribe. Unless
otherwise determined by the Board of Directors with respect to a cash bonus
right granted to a person who is neither an Officer nor a director of the
Company, each cash bonus right granted under the Plan by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution
of the state or country of the holder's domicile at the time of death. The
payment of a cash bonus shall not reduce the number of shares of Common
Stock reserved for issuance under the Plan.
(b) Cash Bonus Rights in Connection With Options. A cash bonus
right granted in connection with an option will entitle an optionee to a
cash bonus when the related option is exercised (or terminates in
connection with the exercise of a stock appreciation right related to the
option) in whole or in part if, in the sole discretion of the Board of
Directors, the bonus right will result in a tax deduction that the Company
has sufficient taxable income to use. If an optionee purchases shares upon
exercise of an option and does not exercise a related stock appreciation
right, the amount of the bonus, if any, shall be determined by multiplying
the excess of the total fair market value of the shares to be acquired upon
the exercise over the total option price for the shares by the applicable
bonus percentage. If the optionee exercises a related stock appreciation
right in connection with the termination of an option, the amount of the
bonus, if any, shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right, including a previously granted bonus right,
may be changed from time to time at the sole discretion of the Board of
Directors but shall in no event exceed 75 percent.
(c) Cash Bonus Rights in Connection With Stock Bonus. A cash
bonus right granted in connection with a stock bonus will entitle the
recipient to a cash bonus payable when the stock bonus is awarded or
restrictions, if any, to which the stock is subject lapse. If bonus stock
awarded is subject to restrictions and is repurchased by the Company or
forfeited by the holder, the cash bonus right granted in connection with
the stock bonus shall terminate and may not be exercised. The amount and
timing of payment of a cash bonus shall be determined by the Board of
Directors.
(d) Cash Bonus Rights in Connection With Stock Purchases. A cash
bonus right granted in connection with the purchase of stock pursuant to
Section 8 will entitle the recipient to a cash bonus when the shares are
purchased or restrictions, if any, to which the stock is subject lapse. Any
cash bonus right granted in connection with shares purchased pursuant to
Section 8 shall terminate and may not be exercised in the event the shares
are repurchased by the Company or forfeited by the holder pursuant to
applicable restrictions. The amount of any cash bonus to be awarded and
timing of payment of a cash bonus shall be determined by the Board of
Directors.
(e) Taxes. The Company shall withhold from any cash bonus paid
pursuant to Section 10 the amount necessary to satisfy any applicable
federal, state and local withholding
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Appendix C - 1996 Stock Incentive Plan
requirements.
11. Performance Units. The Board of Directors may grant performance
units consisting of monetary units which may be earned in whole or in part
if the Company achieves certain goals established by the Board of Directors
over a designated period of time, but not in any event more than 10 years.
The goals established by the Board of Directors may include earnings per
share, return on shareholders' equity, return on invested capital, and such
other goals as may be established by the Board of Directors. In the event
that the minimum performance goal established by the Board of Directors is
not achieved at the conclusion of a period, no payment shall be made to the
participants. In the event the maximum corporate goal is achieved, 100
percent of the monetary value of the performance units shall be paid to or
vested in the participants. Partial achievement of the maximum goal may
result in a payment or vesting corresponding to the degree of achievement
as determined by the Board of Directors. Payment of an award earned may be
in cash or in Common Stock or in a combination of both, and may be made
when earned, or vested and deferred, as the Board of Directors determines.
Deferred awards shall earn interest on the terms and at a rate determined
by the Board of Directors. Unless otherwise determined by the Board of
Directors with respect to a performance unit granted to a person who is
neither an Officer nor a director of the Company, each performance unit
granted under the Plan by its terms shall be nonassignable and
nontransferable by the holder, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the holder's domicile at the time of death. Each participant who
has been awarded a performance unit shall, upon notification of the amount
due, pay to the Company in cash amounts necessary to satisfy any applicable
federal, state and local tax withholding requirements. If the participant
fails to pay the amount demanded, the Company may withhold that amount from
other amounts payable by the Company to the participant, including salary
or fees for services, subject to applicable law. With the consent of the
Board of Directors a participant may satisfy this obligation, in whole or
in part, by having the Company withhold from any shares to be issued that
number of shares that would satisfy the withholding amount due or by
delivering Common Stock to the Company to satisfy the withholding amount.
The payment of a performance unit in cash shall not reduce the number of
shares of Common Stock reserved for issuance under the Plan. The number of
shares reserved for issuance under the Plan shall be reduced by the number
of shares issued upon payment of an award.
12. Foreign Qualified Grants. Awards under the Plan may be granted to
such officers and employees of the Company and its subsidiaries and such
other persons described in Section 1 residing in foreign jurisdictions as
the Board of Directors may determine from time to time. The Board of
Directors may adopt such supplements to the Plan as may be necessary to
comply with the applicable laws of such foreign jurisdictions and to afford
participants favorable treatment under such laws; provided, however, that
no award shall be granted under any such supplement with terms which are
more beneficial to the participants than the terms permitted by the Plan.
13. Changes in Capital Structure.
(a) Stock Splits; Stock Dividends. If the outstanding Common
Stock of the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of
the Company by reason of any stock split, combination of shares or dividend
payable in shares, recapitalization or reclassification appropriate
adjustment shall be
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Appendix C - 1996 Stock Incentive Plan
made by the Board of Directors in the number and kind of shares available
for grants under the Plan. In addition, the Board of Directors shall make
appropriate adjustment in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised, shall be
exercisable, so that the optionee's proportionate interest before and after
the occurrence of the event is maintained. Notwithstanding the foregoing,
the Board of Directors shall have no obligation to effect any adjustment
that would or might result in the issuance of fractional shares, and any
fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any such
adjustments made by the Board of Directors shall be conclusive.
(b) Mergers, Reorganizations, Etc. In the event of a merger,
consolidation, plan of exchange, acquisition of property or stock,
separation, reorganization or liquidation to which the Company or a
subsidiary is a party or a sale of all or substantially all of the
Company's assets (each, a "Transaction"), the Board of Directors shall, in
its sole discretion and to the extent possible under the structure of the
Transaction, select one of the following alternatives for treating
outstanding options under the Plan:
(i) Outstanding options shall remain in effect in accordance
with their terms.
(ii) Outstanding options shall be converted into options to
purchase stock in the corporation that is the surviving or acquiring
corporation in the Transaction. The amount, type of securities subject
thereto and exercise price of the converted options shall be
determined by the Board of Directors of the Company, taking into
account the relative values of the companies involved in the
Transaction and the exchange rate, if any, used in determining shares
of the surviving corporation to be issued to holders of shares of the
Company. Unless otherwise determined by the Board of Directors, the
converted options shall be vested only to the extent that the vesting
requirements relating to options granted hereunder have been
satisfied.
(iii) The Board of Directors shall provide a 30-day period
prior to the consummation of the Transaction during which outstanding
options may be exercised to the extent then exercisable, and upon the
expiration of such 30-day period, all unexercised options shall
immediately terminate. The Board of Directors may, in its sole
discretion, accelerate the exercisability of options so that they are
exercisable in full during such 30-day period.
(c) Dissolution of the Company. In the event of the dissolution
of the Company, options shall be treated in accordance with Section
13(b)(iii).
(d) Rights Issued by Another Corporation. The Board of Directors
may also grant options, stock appreciation rights, performance units, stock
bonuses and cash bonuses and issue restricted stock under the Plan having
terms, conditions and provisions that vary from those specified in this
Plan provided that any such awards are granted in substitution for, or in
connection with the assumption of, existing options, stock appreciation
rights, stock bonuses, cash bonuses, restricted stock and performance units
granted, awarded or issued by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a
Transaction.
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Appendix C - 1996 Stock Incentive Plan
14. Amendment of Plan. The Board of Directors may at any time, and
from time to time, modify or amend the Plan in such respects as it shall
deem advisable because of changes in the law while the Plan is in effect or
for any other reason; provided that the approval of the Company's
shareholders is necessary within twelve months before or after the adoption
by the Board of Directors of any amendment that will: (a) increase the
number of shares of Common Stock to be reserved for the issuance of options
under the Plan; (b) permit the granting of stock options to a class of
persons other than those now permitted to receive stock options under the
Plan; or (c) require shareholder approval under applicable law, including
Section 16(b) of the Exchange Act. Except as provided in Sections 6(a)(iv),
9, 10 and 13, however, no change in an award already granted shall be made
without the written consent of the holder of such award.
15. Approvals. The obligations of the Company under the Plan may be
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take
steps required by state or federal law or applicable regulations, including
rules and regulations of the Securities and Exchange Commission and any
stock exchange or quotations service on which the Company's shares may then
be listed, in connection with the grants under the Plan. The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver
Common Stock under the Plan if such issuance or delivery would violate
applicable state or federal securities laws.
16. Employment and Service Rights. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere
in any way with the right of the Company or any subsidiary by whom such
employee is employed to terminate such employee's employment at any time,
for any reason, with or without cause, or to decrease such employee's
compensation or benefits, or (ii) confer upon any person engaged by the
Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company.
17. Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock
until the date of issue to the recipient of a stock certificate for such
shares. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
18. Securities Regulations. Shares of Common Stock shall not be issued
with respect to an option granted under the Plan unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto
shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, applicable laws of foreign countries and other jurisdictions
and the requirements of any quotation service or stock exchange on which
the shares may then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance, including the
availability of an exemption from registration for the issuance and sale of
any shares hereunder. The inability of the Company to obtain, from any
regulatory body having jurisdiction, the authority deemed by the Company's
counsel to be necessary
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Appendix C - 1996 Stock Incentive Plan
for the lawful issuance and sale of any shares hereunder or the
unavailability of an exemption from registration for the issuance and sale
of any shares hereunder shall relieve the Company of any liability with
respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained. As a condition to the
exercise of an option, the Company may require the Optionee to represent
and warrant at the time of any such exercise that the shares of Common
Stock 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 relevant
provision of the aforementioned laws. The Company may place a stop-transfer
order against any shares of Common Stock on the official stock books and
records of the Company, and a legend may be stamped on stock certificates
to the effect that the shares of Common Stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred
in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation. The Board of Directors may
also require such other action or agreement by the optionees as may from
time to time be necessary to comply with the federal and state securities
laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE
REGISTRATION OF THE OPTIONS OR STOCK THEREUNDER.
Adopted by the Board of Directors on _____________, 1996.
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APPENDIX D - PROXY
JUNGLE STREET, INC.
Special Meeting, October 23, 1996
PROXY SOLICITED BY BOARD OF DIRECTORS
PLEASE SIGN AND RETURN THIS PROXY
The undersigned hereby appoints Charles D. DeJong and Mark Hamilton,
and each of them, proxies with power of substitution to vote on behalf of
the undersigned all shares that the undersigned may be entitled to vote at
the Special Meeting of Shareholders of Jungle Street, Inc. (the "Company"),
on October 23, 1996, and any adjournments thereof, with all powers that the
undersigned would possess if personally present, with respect to the
following:
1. APPROVAL OF THE MERGER OF THE COMPANY WITH AND INTO ITS WHOLLY OWNED
SUBSIDIARY TELEVAR, INC. :
[ ] FOR [ ] AGAINST [ ] ABSTENTION
2. APPROVAL OF THE 1996 STOCK INCENTIVE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTENTION
3. TRANSACTION OF ANY BUSINESS THAT PROPERLY COMES BEFORE THE MEETING OR
ANY ADJOURNMENTS THEREOF. A MAJORITY OF THE PROXIES OR SUBSTITUTES AT
THE MEETING MAY EXERCISE ALL THE POWERS GRANTED HEREBY.
(Continued and to be signed on the other side)
<PAGE>
The shares represented by this proxy will be voted as specified on the
reverse hereof, but if no specification is made, this proxy will be voted
to approve the Merger and the 1996 Stock Incentive Plan. The proxies may
vote in their discretion as to other matters that may come before this
meeting.
No. of Shares: __________ Date: _______________, 1996
- - - - - -------------------------------------------------------------------------------
Signature or Signatures Please date and
sign as name is imprinted hereon,
including designation as executor,
trust, etc. if applicable. A corporation
must sign its name by the president or
other authorized officer.
The Special Meeting of Shareholders of
Jungle Street, Inc. will be held at the
Red Lion Inn, 1225 Wenatchee Avenue,
Wenatchee, Washington, on October 23,
1996, at 10:00 a.m. Pacific Standard
Time.
Please Note: Any shares of stock of the Company held in the name of
fiduciaries, custodians or brokerage houses for the benefit of their
clients may only be voted by the fiduciary, custodian or brokerage house
itself. The beneficial owner may not directly vote or appoint a proxy to
vote the shares and must instruct the person or entity in whose name the
shares are held how to vote the shares held for the beneficial owner.
Therefore, if any shares of stock of the company are held in "street name"
by a brokerage house, only the brokerage house, at the instructions of its
client, may vote or appoint a proxy to vote the shares.
