<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Eagle River Interactive, Inc.
-----------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
OF
EAGLE RIVER INTERACTIVE, INC.
1060 W. BEAVER CREEK BOULEVARD
AVON, CO 81620
TO BE HELD ON MAY 29, 1997
10:00 A.M. CENTRAL DAYLIGHT TIME
THE STANDARD CLUB
320 S. PLYMOUTH COURT
CHICAGO, ILLINOIS 60604
Dear Stockholders:
It is my pleasure to invite you to attend the 1997 Annual Meeting of
Stockholders of Eagle River Interactive, Inc. (the "Company"). The following
items will be addressed during the Annual Meeting:
1. Election of two members to the Board of Directors of the Company to
serve for a term of three years;
2. Approval of an amendment to the Company's 1995 Executive Stock
Option Plan to increase the number of shares reserved for issuance
thereunder by 1,500,000 shares;
3. Approval of an amendment to the Company's 1995 Employee Stock
Option Plan to increase the number of shares reserved for issuance
thereunder by 900,000 shares;
4. Ratification of the appointment of Arthur Andersen LLP to serve as
the Company's independent public accountants for the year ending
December 31, 1997; and
5. Action upon such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record as of the close of business on April 23, 1997 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting
or any adjournment thereof. A list of stockholders entitled to vote at the
Annual Meeting will be available for inspection by stockholders for any purpose
germane to the Annual Meeting at the Company's Chicago office, located at 400 W.
Erie, Suite 504, Chicago, Illinois 60610, for the ten days immediately preceding
the Annual Meeting date. The Company's 1996 Annual Report is being mailed to all
stockholders of record as of the Record Date and accompanies the enclosed Proxy
Statement. The Selected Financial Data from the Company's 1996 Form 10-K is also
provided for your information in Appendix "A".
Regardless of whether you plan to attend the Annual Meeting, please
complete, sign and date the enclosed proxy card and return it promptly in the
enclosed envelope. Your proxy may be revoked in the manner described in the
Proxy Statement at any time before it has been voted at the Annual Meeting.
I look forward to seeing you at the Annual Meeting. On behalf of the
management and directors of Eagle River Interactive, I want to thank you for
your support.
/s/ MARC PINTO
Marc Pinto
Executive Vice President,
Avon, Colorado Chief Financial Officer
April 29, 1997 and Corporate Secretary
<PAGE> 3
EAGLE RIVER INTERACTIVE, INC.
1060 W. BEAVER CREEK BOULEVARD
AVON, CO 81620
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1997
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of Eagle River
Interactive, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Stockholders to be held at The Standard Club, 320 S. Plymouth
Court, Chicago, IL 60604, on Thursday, May 29, 1997 at 10:00 a.m., CDT, and any
adjournments thereof (the "Annual Meeting"). A stockholder may revoke a proxy at
any time before the meeting is convened by filing with the Secretary of the
Company an instrument of revocation or a duly executed proxy bearing a later
date. A proxy also may be revoked by attending the Annual Meeting and voting in
person, although attendance at the Annual Meeting will not, in and of itself,
constitute a revocation of proxy. This Proxy Statement and the accompanying
Notice of Annual Meeting and form of proxy are first being sent to stockholders
on or about April 29, 1997.
Stockholders are urged to sign the accompanying form of proxy and return it
as soon as possible in the envelope provided for that purpose. Returning a proxy
card will not prevent a stockholder from attending the Annual Meeting. If the
enclosed proxy is properly executed and returned in time for voting with a
choice specified thereon, the shares represented thereby will be voted as
indicated on such proxy. If no specification is made, the proxy will be voted by
the person(s) named thereon for the election of the nominees named herein as
directors (or substitutes therefor if the nominees are unable or refuse to
serve), for proposals 2, 3 and 4 and, in the discretion of such person(s), upon
such matters not presently known or determined that properly may come before the
Annual Meeting. A stockholder who wishes to designate a person or persons to act
as his or her proxy at the Annual Meeting, other than the proxies designated by
the Board of Directors, may strike out the names appearing on the enclosed form
of proxy, insert the name of any other such person or persons, sign the proxy
and transmit it directly to such other designated person or persons for use at
the Annual Meeting.
Stockholders of record on April 23, 1997 (the "Record Date") are entitled
to notice of and to vote at the Annual Meeting. As of the Record Date,
13,487,768 shares of the Company's common stock, $.001 par value (the "Common
Stock"), were outstanding and are entitled to one vote each on all matters to be
considered at the Annual Meeting. Stockholders do not have the right to cumulate
their votes in the election of directors. A majority of the shares entitled to
vote present, in person or by proxy, at the Annual Meeting shall constitute a
quorum. If a quorum is present, the affirmative vote of a plurality of the
shares that are present, in person or by proxy, at the Annual Meeting and
entitled to vote will be sufficient to elect the directors, and the affirmative
vote of a majority of such shares will be sufficient to approve proposals 2, 3
and 4. Abstentions and broker non-votes will be treated as present at the Annual
Meeting for purposes of reaching a quorum. Abstentions shall have no effect on
the election of directors but shall be treated as votes against proposals 2, 3
and 4. Broker non-votes with respect to a particular proposal will not be
considered present and entitled to vote on such proposal.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies in person or by telephone. Brokers, nominees, fiduciaries and
other custodians will be requested to forward soliciting materials to the
beneficial owners of shares of Common Stock and will be reimbursed by the
Company for their reasonable expenses in forwarding such materials.
1
<PAGE> 4
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors presently consists of seven directors (six of whom
are non-employee directors), and is divided into three classes. One class of
directors is elected annually, and each director in the class serves a
three-year term. The class to be elected at the Annual Meeting consists of two
directors. The Board has nominated Andrew J. Filipowski and Peter I. Mason for
these positions, each of whom has indicated his willingness to serve if elected.
In the event that a nominee should become unwilling or unable to serve as a
director, all duly executed proxies shall be voted for the election of such
other person as may be designated by the Board of Directors. Unless authority to
vote for the nominees is withheld, all votes represented by a properly executed
proxy will be cast in favor of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR.
The table below contains a brief description of the business experience and
positions held by the nominees and the other directors of the Company.
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
---- --- --------------------------------
<S> <C> <C>
NOMINEES FOR ELECTION:
Andrew J. Filipowski.............. 46 Mr. Filipowski has been a director of the Company since
December 1995. Mr. Filipowski has served as Chairman of the
Board, President and Chief Executive Officer of PLATINUM
technology, inc., a publicly held software developer, since
1987. Mr. Filipowski was a founder of DBMS, Inc., a
software products and services company, and served as its
Chairman, President and Chief Executive Officer from 1979
until March 1987. From 1974 to 1979, he was employed by
Cullinet Software, Inc. in several capacities, including
Executive Vice President. Mr. Filipowski serves as a
director on the board of Systems Software Associates and
Platinum Entertainment, Inc. He also serves as director of
several privately held companies.
Peter I. Mason(2)................. 45 Mr. Mason has been a director of the Company since
September 1995. He is a founding partner of the law firm of
Freeborn & Peters, which has served as outside counsel to
the Company since July 1995. Mr. Mason is also a director
of U.S. Robotics Corporation, May & Speh, Inc. and several
privately held companies.
TERM EXPIRING IN 1998:
Paul D. Carbery(2)................ 35 Mr. Carbery has been a director of the Company since
December 1995. Mr. Carbery has been a General Partner of
Frontenac Company, a private equity investment management
partnership, since June 1993 and was an associate of that
firm from September 1989 to June 1993. He serves as a
director of Whitman-Hart, Inc. as well as several privately
held companies.
Rodney L. Goldstein(1)(3)......... 45 Mr. Goldstein has been a director of the Company since
September 1995. Mr. Goldstein is the Managing Partner of
Frontenac Company, where he has been a partner since 1981.
He serves as a director of Platinum Entertainment, Inc.,
Marks Bros. Jewelers, Inc. and several privately held
companies.
Steven Ness(2).................... 49 Mr. Ness has been a director of the Company since September
1995. Mr. Ness has served as Chairman of the Board,
President and Chief Executive Officer of Ness Holding Co.,
a manufacturer of food products and equipment, for more
than five years.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
---- --- --------------------------------
<S> <C> <C>
TERM EXPIRING IN 1999:
Terence M. Graunke(1)............. 38 Terence M. Graunke founded Eagle River Communications,
Inc., the predecessor to the Company, in May 1994 and has
served as Chairman of the Board, President and Chief
Executive Officer since that time. From December 1992 to
May 1994, Mr. Graunke was President and Chief Executive
Officer of Rapp Collins Communications, a direct response
advertising agency, and of DDB Needham -- FOCUS GTE, a full
service agency dedicated to GTE. From December 1990 to
December 1992, Mr. Graunke served as Chairman of the Board,
President and Chief Executive Officer of U.S.
Communications Corporation, a marketing communications
agency which was sold in 1992 to Omnicom. Throughout the
1980s, Mr. Graunke managed Unispond, a direct marketing
agency, where he served as Chief Executive Officer from
1986 to 1989. In 1990, he acquired Unispond, which later
merged operations with U.S. Communications. The combined
entity was renamed U.S. Communications. Mr. Graunke is also
a director of U.S. Robotics Corporation.
Casey Cowell(1)(3)................ 44 Mr. Cowell has been a director of the Company since
September 1995. Since 1983, Mr. Cowell has served as
Chairman of the Board and Chief Executive Officer of U.S.
Robotics Corporation, a publicly held manufacturer of
electronic communications products, which he co-founded in
1976. From 1983 to 1996 Mr. Cowell also served as President
of U.S. Robotics Corporation. Mr. Cowell also serves as a
director of Northwestern Memorial Corporation and Illinois
Coalition.
</TABLE>
- ---------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
The Board of Directors has three standing committees: the Executive
Committee, the Audit Committee and the Compensation Committee. The Company does
not have a nominating committee. The nominating function is performed by the
Executive Committee, which has not established a formal policy or procedure for
considering stockholder nominations. Stockholder nominations must comply with
the notice requirements set forth in the Company's Bylaws.
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the business and affairs of the Company
between the meetings of the Board, except as provided by the Bylaws or limited
by the provisions of the Delaware General Corporation Law. During 1996, the
Executive Committee met formally and informally on a regular basis.
The Audit Committee recommends to the Board of Directors the appointment of
the independent certified public accountants for the following year and reviews
the scope of the audit, the independent certified public accountants' report and
the accountants' comments relative to the adequacy of the Company's system of
internal controls and accounting policies. The Audit Committee held one meeting
in 1996.
The Compensation Committee is responsible for making determinations
regarding salaries, bonuses and other compensation for the Company's executive
officers, including decisions with respect to stock option grants. During 1996,
the Compensation Committee met informally and acted by written consent on
numerous occasions.
3
<PAGE> 6
During 1996, the Board of Directors held six meetings. All members of the
Board attended at least 75% of the aggregate of the number of Board meetings and
the number of the meetings of their respective committees during that period
except for Andrew J. Filipowski and Steven Ness who attended 67% and 71% of such
meetings, respectively. The Board of Directors also took action five times by
unanimous written consent during 1996 with all directors participating.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company are not separately
compensated for serving on the Board of Directors. Non-employee directors are
compensated through participation in the Company's 1995 Executive Stock Option
Plan and through cash payments for attendance at board and committee meetings.
Non-employee directors receive $2,500 for each board meeting attended and $1,000
for each standing committee meeting attended. In addition, non-employee
directors receive an annual retainer fee of $2,000. Peter I. Mason, a
non-employee director, is a partner with the law firm of Freeborn & Peters,
outside counsel to the Company during 1996.
In addition, non-employee directors receive an option to purchase 15,000
shares of Common Stock under the Company's 1995 Executive Stock Option Plan on
the date they become directors, and an additional option to purchase 15,000
shares every three years on the anniversary of the initial grant if they
continue to serve as directors on such date. Options granted to non-employee
directors have an exercise price equal to the fair market value of the Common
Stock on the date of grant and become exercisable in three equal annual
installments beginning on the first anniversary of the date of grant (other than
options granted to non-employee directors prior to the Company's initial public
offering). Options granted to non-employee directors terminate on the earlier of
the tenth anniversary of the date of grant or three months after the individual
ceases to be director (which may be extended in the discretion of the
Compensation Committee to six months, and which is automatically extended to one
year in the event of disability or death).
OWNERSHIP OF SECURITIES
The following table sets forth, as of April 23, 1997, unless otherwise
indicated, the number of shares of Common Stock beneficially owned by (i) each
person known by the Company to own beneficially more than five percent of the
outstanding Common Stock, (ii) each director and nominee, (iii) the persons
named in the Summary Compensation Table below, and (iv) all directors and
executive officers as a group. Unless otherwise indicated, the persons named
below have sole voting and investment power with respect to all shares shown as
beneficially owned by them:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------ ----------------- --------
<S> <C> <C>
Terence M. Graunke........................................ 3,465,798(1) 24.9
Paul D. Carbery........................................... 3,023,550(2) 22.4
Rodney L. Goldstein....................................... 3,023,550(2) 22.4
Frontenac VI Limited Partnership.......................... 3,000,000(3) 22.2
Thomas R. Graunke......................................... 1,185,000(4) 8.8
Montgomery Asset Management, L.P.......................... 967,000(5) 7.2
Jennison Associates Capital Corp.......................... 765,500(6) 5.7
Casey Cowell.............................................. 338,550(7) 2.5
Andrew J. Filipowski...................................... 333,550(8) 2.5
Melinda S. Gladitsch...................................... 234,900(9) 1.7
Steven Ness............................................... 161,500(7) 1.2
Peter I. Mason............................................ 79,800(10) *
Marc Pinto................................................ 74,035(11) *
Kevin Rowe................................................ -- --
All directors and executive officers as a group (10
persons)................................................ 8,685,333(12) 61.5
</TABLE>
- ---------------
* Less than 1%.
4
<PAGE> 7
(1) Includes 418,350 shares issuable pursuant to options that are currently
exercisable. Mr. Graunke's address is c/o Eagle River Interactive, Inc.,
1060 West Beaver Creek Blvd., Avon, Colorado 81620.
(2) Includes 23,550 shares issuable pursuant to options that are currently
exercisable, and 3,000,000 shares held by Frontenac VI Limited Partnership.
Messrs. Carbery and Goldstein are General Partners of Frontenac Company,
the general partner of Frontenac VI Limited Partnership, and may be deemed
to have shared voting and investment power over the shares held by
Frontenac VI Limited Partnership. Messrs. Carbery and Goldstein disclaim
beneficial ownership of the shares held by Frontenac VI Limited
Partnership. The address of Messrs. Carbery and Goldstein is c/o Frontenac
Company, 135 South LaSalle Street, Chicago, Illinois 60603.
(3) Excludes options to purchase shares of Common Stock held by Messrs. Carbery
and Goldstein, who are directors of the Company and general partners of
Frontenac Company, the general partner of Frontenac VI Limited Partnership.
The address of Frontenac VI Limited Partnership is c/o Frontenac Company,
135 South LaSalle Street, Chicago, Illinois 60603.
(4) Includes 117,500 shares that have been pledged to the Company, pursuant to
a Stock Pledge Agreement, to secure certain potential indemnification
obligations of Mr. Graunke to the Company and Mastering Computers, Inc., a
wholly-owned subsidiary of the Company. In connection with the pledge of
stock, Mr. Graunke has agreed not to sell, transfer, exchange or otherwise
dispose or agree to dispose of all or any portion of such shares without
the Company's consent until such shares are released pursuant to the terms
of the Stock Pledge Agreement.
(5) Includes 619,600 shares with respect to which Montgomery Asset Management,
L.P. ("Montgomery") has sole voting power. Montgomery's address is 101
California Street, San Francisco, California 94111. The number of shares
reflected in the table is based on information contained in a Schedule 13G,
dated February 11, 1997, filed by Montgomery with the Securities and
Exchange Commission.
(6) Includes 462,200 shares with respect to which Jennison Associates Capital
Corp. ("Jennison") has sole voting power, and 303,300 shares with respect
to which it has shared voting power. Jennison shares dispositive power with
respect to all of the 765,500 shares. The Prudential Insurance Company of
America owns all of the stock of Jennison and may be deemed to have the
power to exercise or direct the exercise of such voting and/or dispositive
power that Jennison may have with respect to the shares of the Company's
Common Stock reported above. Jennison's address is 466 Lexington Avenue,
New York, New York 10017. The number of shares reflected in the table is
based on information contained in a Schedule 13G, dated February 3, 1997,
filed by Jennison with the Securities and Exchange Commission.
(7) Includes 23,550 shares issuable pursuant to options that are currently
exercisable.
(8) Includes 23,550 shares issuable pursuant to options that are currently
exercisable and 300,000 shares held by Platinum Ventures Partners I L.P.
and Platinum Ventures Partners II L.P. (collectively "Platinum Ventures").
Mr. Filipowski is the President, Chief Executive Officer and a stockholder
of Platinum Ventures Partners, Inc., the general partner of the Platinum
Ventures and a limited partner of each of the Platinum Ventures, and may be
deemed to have shared voting and investment power over the shares held by
the Platinum Ventures. Mr. Filipowski disclaims beneficial ownership of the
shares held by the Platinum Ventures.
(9) Represents shares issuable pursuant to options that are currently
exercisable.
(10) Includes 19,800 shares issuable pursuant to options that are currently
exercisable.
(11) Includes 74,025 shares issuable pursuant to options that are currently
exercisable.
(12) Includes 629,925 shares issuable pursuant to options that are currently
exercisable, 3,000,000 shares held by Frontenac VI Limited Partnership and
300,000 shares held by the Platinum Ventures. See footnotes 1, 2, 4, 7, 8,
10 and 11 above.
5
<PAGE> 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and beneficial owners of more than ten percent of the Common
Stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission and to provide the Company with
copies of such reports. Based solely on a review of the copies provided to the
Company and written representations from the directors and executive officers,
the Company believes that, for 1996, all applicable Section 16(a) filing
requirements have been met, except for one report on Form 3 inadvertently filed
late by Andrew J. Filipowski on March 29, 1996, one report on Form 4
inadvertently filed late by Mr. Filipowski on April 11, 1996 reporting one
transaction and the inadvertent omission of one report on Form 4 by Steven Ness
with respect to one transaction.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid for services rendered
during 1995 and 1996 to the Company in all capacities by (i) the Company's Chief
Executive Officer and (ii) the Company's four highest paid executive officers
during 1996, other than the Chief Executive Officer (collectively, the "Named
Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------ SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Terence M. Graunke, Chairman of the 1996 $275,000 $150,000 200,000(4) $14,490(1)
Board, President and Chief 1995 288,815 -0- 429,600 9,750(1)
Executive Officer
Kevin Rowe, Executive Vice President 1996(3) 12,180 -0- 300,000(4) 305(2)
and General Manager, Interactive 1995 N/A N/A N/A N/A
Development Group
Thomas R. Graunke, Executive Vice 1996(3) 83,333 75,000 405,000(4) 10,591(1)
President and General Manager, 1995 N/A N/A N/A N/A
Corporate Training Group
Marc Pinto, Executive Vice President 1996 175,000 60,000 75,000(4) 12,550(1)
and Chief Financial Officer 1995(3) 3,365 -0- 296,100 -0-
Melinda S. Gladitsch, Executive 1996 183,333 30,000 -0- 16,750(1)
Vice President 1995(3) 85,334 -0- 347,400 6,000(1)
</TABLE>
- ---------------
(1) Represents 401(k) matching contributions plus an automobile allowance or
value of company provided automobile in the amounts of $9,750, $9,750,
$8,750, $7,800, $12,000 and $6,000, respectively.
(2) Represents 401(k) matching contributions.
(3) Represents partial year compensation.
(4) Includes 200,000, 300,000, 150,000 and 75,000 shares underlying options
granted under the 1995 Executive Stock Option Plan to Terence M. Graunke,
Kevin Rowe, Thomas R. Graunke and Marc Pinto, respectively, all of which are
subject to approval by the Company's stockholders of an amendment to
increase the number of shares available for issuance thereunder by 1,500,000
shares. See "PROPOSAL 2. AMENDMENT TO THE 1995 EXECUTIVE STOCK OPTION PLAN."
In the event the amendment is not approved by the stockholders, Kevin Rowe
is entitled to stock appreciation rights, a bonus or other form of
compensation in lieu of the options.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options to the Named Executive Officers during 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
----------------------------------------- ANNUAL RATES OF STOCK
PERCENT OF TOTAL PRICE APPRECIATION
NUMBER OF SECURITIES OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(2)
UNDERLYING EMPLOYEES BASE PRICE EXPIRATION -----------------------
NAME OPTIONS GRANTED IN FISCAL YEAR(3) PER SHARE DATE 5% 10%
---- -------------------- ------------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terence M. Graunke............... 200,000(4) 7.9% $ 6.50 12/09/06 $ 817,563 $2,071,865
Kevin Rowe....................... 300,000(4) 11.8 5.75 12/08/06 1,084,843 2,749,206
Thomas R. Graunke................ 255,000 10.1 17.00 7/31/06 2,726,258 6,908,874
150,000(4) 5.9 6.50 12/09/06 613,172 1,553,899
Marc Pinto....................... 75,000(4) 3.0 6.50 12/09/06 306,586 776,949
</TABLE>
- ---------------
(1) Options granted pursuant to the Company's 1995 Executive Stock Option Plan
and subject to the terms of such plan. All options were granted at an
exercise price equal to the fair market value of the Common Stock on the
grant date and vest in equal annual installments over a four-year period.
(2) Hypothetical gains based on assumed rates of annual compounded stock price
appreciation of 5% and 10% from the date of grant over the full option term.
The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of future increases in the price of its Common Stock.
(3) Based on an aggregate of 2,536,925 options granted to employees of the
Company in 1996.
(4) Represents shares underlying options granted under the 1995 Executive Stock
Option Plan which are subject to approval by the Company's stockholders of
an amendment to increase the number of shares available for issuance
thereunder by 1,500,000 shares. See "PROPOSAL 2. AMENDMENT TO THE 1995
EXECUTIVE STOCK OPTION PLAN." In the event the amendment is not approved by
the stockholders, Kevin Rowe is entitled to stock appreciation rights, a
bonus or other form of compensation in lieu of the options.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding the number and
value of unexercised options held by the Named Executive Officers as of December
31, 1996. No options were exercised by Named Executive Officers during 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Terence M. Graunke...................... 418,350 211,250 $1,735,069 $ 349,531
Kevin Rowe.............................. -0- 300,000 -0- 637,500
Thomas R. Graunke....................... -0- 405,000 -0- 206,250
Marc Pinto.............................. 74,025 297,075 305,353 1,019,184
Melinda Gladitsch....................... 234,900 112,500 1,062,713 745,313
</TABLE>
- ---------------
(1) The value of "in-the-money" options represents the difference between the
exercise price of such options and $7 7/8, the last sale price of a share of
Common Stock on December 31, 1996 as reported by The Nasdaq Stock Market.
7
<PAGE> 10
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with each of the Named
Executive Officers.
The employment agreement with Terence M. Graunke provides for an annual
base salary of $275,000 plus a bonus of up to $275,000 to be awarded annually at
the discretion of the Compensation Committee. For 1996 the Company paid Mr.
Graunke a bonus of $150,000. Mr. Graunke's employment agreement, which expires
September 30, 2001, may be terminated by either party upon 90 days' notice. In
the event Mr. Graunke is terminated without "cause" or if he resigns for "good
reason" (as defined in the agreement), he is entitled to receive a severance
payment in the amount of three times his base salary.
The employment agreement with Marc Pinto provides for an annual base salary
of $175,000. Mr. Pinto is entitled to participate in the Company's bonus plan
for senior executives, and for 1996 he received a bonus of $60,000 under the
plan. Mr. Pinto's agreement, which expires December 25, 1999, may be terminated
by either party upon 60 days' notice. In the event Mr. Pinto is terminated
without "cause" (as defined in the agreement), he is entitled to receive his
base salary for a period of six months.
The employment agreement with Thomas R. Graunke provides for an annual base
salary of $200,000 which is to be reviewed on the first anniversary of the
agreement (July 31, 1997) on a merit basis. Mr. Graunke is entitled to
participate in the Company's bonus plan for senior executives, and for August 1
through December 31, 1996 he received a bonus of $75,000 under the plan.
Pursuant to the agreement, Mr. Graunke was granted an option to purchase 255,000
shares of the Company's Common Stock. Mr. Graunke's employment agreement, which
expires in July 2000, may be terminated by either party upon 30 days' notice. In
the event Mr. Graunke is terminated without "cause" (as defined in the
agreement) before July 31, 1997, he is entitled to a severance payment equal to
two times his base salary. If he is terminated without cause on or after July
31, 1997, but before July 31, 1999, he is entitled to receive his base salary
for a period of twelve months, and if he is terminated without cause after July
31, 1999, he is entitled to receive his base salary for the remaining term of
the agreement. If Mr. Graunke terminates his employment for "good reason" (as
defined in the agreement) prior to July 31, 1999, he is entitled to severance
equal to his base salary for a period of twelve months, and, if he terminates
his employment for good reason on or after July 31, 1999, he is entitled to
receive his base salary for the remaining term of the agreement.
The employment agreement with Kevin Rowe provides for an annual base salary
of $200,000 which is to be reviewed on the first anniversary of the agreement
(December 9, 1997) on a merit basis. Mr. Rowe is entitled to participate in the
Company's bonus plan for senior executives, and the agreement sets a target
bonus of $200,000 for each fiscal year during the term of the agreement.
Pursuant to the agreement, Mr. Rowe was granted an option to purchase 300,000
shares of the Company's Common Stock, which grant is subject to stockholder
approval of an increase in the number of shares available for issuance under the
Company's 1995 Executive Stock Option Plan. In the event such an increase is not
approved, Mr. Rowe is entitled to stock appreciation rights, a bonus or other
form of compensation to compensate him for the loss of the economic benefit of
such options. Mr. Rowe's employment agreement, which expires in December 2000,
may be terminated by either party upon two weeks' notice. In the event the
Company terminates Mr. Rowe without "cause" (as defined in the agreement), or he
terminates his employment for "good reason" (as defined in the agreement), Mr.
Rowe is entitled to severance equal to 75% of his base salary, if such
termination occurs prior to the third anniversary of the agreement, or 50% of
his base salary, if such termination occurs on or after the third anniversary.
Each of the employment agreements with the Named Executive Officers
contains certain non-competition and confidentiality provisions.
The 1995 Executive Stock Option Plan and the 1995 Employee Stock Option
Plan each contain a provision which provides that options granted under the
respective plans become exercisable upon a "change in control" (as such term is
defined in the plans).
8
<PAGE> 11
STOCK PERFORMANCE GRAPH
The graph below compares the monthly percentage changes in the Company's
cumulative total stockholder return from March 21, 1996 (the date of the
Company's initial public offering) through March 31, 1997, with the cumulative
total return of the Nasdaq Composite Index for the Nasdaq Stock Market (U.S.
Companies) and a peer group of other publicly traded companies providing either
interactive development services or leader-led trading in the information
technology area (comprised of CKS Group, Inc., The Leap Partnership, Wave
Technologies, Inc and Learning Tree International). The graph assumes the
investment of $100 and the reinvestment of all dividends. The return of the peer
group is weighted by market capitalization. The stock price performance shown on
the graph below is not necessarily indicative of future stock price performance.
COMPARISON OF 375 DAY CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD EAGLE RIVER NASDAQ COMPARABLE
(FISCAL YEAR COVERED) INTERACTIVE COM INDEX
<S> <C> <C> <C>
03/22/96 100.000 100.000 100.000
03/29/96 88.136 99.926 94.710
04/26/96 150.000 107.682 119.846
05/31/96 145.763 112.811 143.716
06/28/96 133.898 107.512 125.667
07/26/96 116.949 97.933 103.628
08/30/96 67.797 103.564 106.678
09/27/96 67.797 111.598 112.867
10/25/96 67.797 110.922 110.481
11/29/96 41.525 117.273 123.227
12/27/96 52.542 117.162 125.849
01/31/97 53.390 125.188 165.123
02/28/97 89.831 118.760 143.466
03/27/97 65.254 113.363 118.402
</TABLE>
- ---------------
*Total return assumes reinvestment of dividends, if any.
BOARD COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee is
composed entirely of directors who are neither executive officers nor employees
of the Company to ensure that the Company's executive compensation program is
administered in an objective manner. In addition to determining the salary and
bonus compensation for all of the Company's most highly compensated executive
officers, the Compensation Committee determines the nature, timing and amount of
awards and grants under the Company's stock option plans and makes
recommendations as to the administration of other compensation plans and
programs of the Company as they relate to executive officers.
Compensation of Executive Officers Generally
The Company's executive compensation program is designed to align the
financial interests of the Company's management with the financial interests of
its stockholders and to attract, retain, motivate and reward talented executives
who are essential to the Company's long-term success within a highly competitive
9
<PAGE> 12
industry that demands unique talents, skills and capabilities. Generally, the
Company's executive compensation program makes a significant portion of each
executive's pay contingent upon growth and improvement in the Company's results
of operations, with the potential for exceptional reward for truly exceptional
performance. In 1996 the program was designed to provide compensation for
meeting and exceeding the internal goals for earnings per share and revenue
growth. The 1997 program is designed to provide compensation for meeting and
exceeding the internal goals for earnings per share.
The Compensation Committee reviews compensation criteria annually to ensure
they are consistent with the Company's overall objective of enhancing
stockholder value. The executive compensation program is designed to reward
executives for the overall level of the Company's financial performance and
achievement of strategic goals. In particular, the Company's executive
compensation program is intended to provide rewards contingent upon Company and
individual performance, link executive compensation to factors which should
result in increases in the value of the Common Stock, promote teamwork among
executives and other Company employees, encourage the retention of an effective
management team, and encourage personal and professional development and growth.
Components of Compensation
The principal elements of the Company's executive compensation program are
base salary, annual bonuses and stock options.
Base Salary. An executive's initial base salary typically is established by
negotiation between the executive and the Company and is set forth in an
employment agreement with the executive. In determining appropriate base salary
levels, the Compensation Committee reviews salaries paid to executives with
similar responsibilities at the Company and at comparable companies. Base
salaries for the Company's executive officers in 1996 were set forth in each
executive's employment agreement. Subject to the terms of the executive's
employment agreement, the Compensation Committee will review base salary on an
annual basis and will adjust base salaries upon achievement of objective and
subjective performance goals.
Annual Bonus. Under the Company's Performance Bonus Plan for executive
officers (the "Bonus Plan") as implemented for 1996, certain employees of the
Company who perform significant management and decision-making functions were
eligible to receive a performance bonus. Under the Bonus Plan, the Compensation
Committee selects executives to participate in the Bonus Plan (subject to the
terms of employment agreements) and establishes objective performance criteria
which, in 1996, were based on earnings per share and revenue growth. The Bonus
Plan for 1996 provided incentive to attain both revenue targets and earnings per
share goals. Although the Company achieved its revenue targets for 1996, the
Compensation Committee reduced the amount of bonuses payable under the Bonus
Plan in light of the Company's overall financial performance.
Stock Options. The Company believes that stock options play an important
role in attracting and retaining talented executives and managers who possess
demonstrated skills and experience and in aligning management's interests with
those of the Company's stockholders on a long-term basis. For these reasons, the
Company adopted the 1995 Executive Stock Option Plan as a stock-based incentive
program primarily for its executive officers and directors. The Committee
believes the Executive Stock Option Plan is an important feature of the
Company's executive compensation package. Under the Executive Stock Option Plan,
the Compensation Committee or the Board of Directors (the "Administrator") may
grant options to executive officers who are expected to contribute materially to
the Company's future success. In determining the size of stock option grants,
the Compensation Committee focused primarily on the Company's performance goals
and the perceived role of each executive in accomplishing such goals, as well as
the satisfaction of individual performance objectives. In addition, option
grants may be negotiated between the Company and an executive as part of an
executive's employment agreement. Stock options granted to executive officers
generally become exercisable over a four-year period and typically are granted
with an exercise price equal to the fair market value of the Common Stock as of
the date of grant. The value of the stock options is directly tied to the value
of a share of the Common Stock.
10
<PAGE> 13
Compensation of the Chief Executive Officer
Terence M. Graunke currently serves as the Chairman, President and Chief
Executive Officer of the Company. Mr. Graunke's salary for 1996 was established
based on the terms of his employment agreement. Mr. Graunke's other compensation
for 1996 was determined utilizing the same general philosophy and criteria used
for other executive officers as described above, including the Company's
achievement of revenue goals, the growth and expansion of the Company, and the
setting of strategic direction and vision for the Company. For the 1996 fiscal
year, Mr. Graunke received a salary of $275,000 pursuant to his employment
agreement with the Company, a bonus of $150,000, and an option to purchase
200,000 shares of Common Stock exercisable at $6.50 per share.
The Compensation Committee believes that Mr. Graunke met his individual
performance objectives for 1996. During 1996, Mr. Graunke set the strategic
direction for the Company which resulted in part in the successful business
combinations with Mastering Computers, Inc. and Graphic Media, Inc. In addition,
the Company's revenues increased 89% from $20.8 million in 1995 to $39.3 million
in 1996, which results include the revenues of Mastering Computers, Inc. and
Graphic Media, Inc. for each year indicated. The Compensation Committee believes
that Mr. Graunke's total compensation for 1996 fairly and sufficiently rewarded
him for such performance and will provide sufficient incentive to retain Mr.
Graunke as a key employee on whom the Company is dependent for its continued
success.
Tax Considerations
The Compensation Committee has determined that it is unlikely that the
Company would pay any amounts for 1996 that would result in a loss of the
federal income tax deduction under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and, accordingly, has not recommended that any special
actions be taken or that any plans or programs be revised at this time.
The foregoing report has been approved by each member of the Compensation
Committee and Peter I. Mason, who resigned from the Compensation Committee
during 1996 as a result of amendments to the rules under Section 16 of the
Securities Exchange Act of 1934.
The Compensation Committee
Casey Cowell
Rodney L. Goldstein
Peter I. Mason
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Casey Cowell, Rodney L. Goldstein and Peter I. Mason, none of
whom has at any time been an employee of the Company, served on the Compensation
Committee of the Board of Directors. Mr. Mason is a partner in the law firm of
Freeborn & Peters, which provided legal services to the Company in 1996. See
"Certain Relationships and Related Transactions." Mr. Mason resigned from the
Compensation Committee during 1996. Terence M. Graunke serves as a member of the
Board of Directors of U.S. Robotics Corporation, a company for which Casey
Cowell serves as Chairman of the Board and Chief Executive Officer.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases 1,986 square feet of office space for the Company's
executive offices located in Avon, Colorado from BCL Investors, LLC ("BCL"), a
limited liability company of which Terence M. Graunke, Andrew J. Filipowski,
Peter I. Mason and Steven Ness are 40%, 20%, 20% and 20% owners, respectively.
The Company is required to make monthly payments of $5,734 in base rent and
approximately $1,000 in fees (which are passed through BCL to unaffiliated
entities) under the terms of the lease, which was entered into prior to the
Company's initial public offering in March 1996. During 1996, the Company paid
an
11
<PAGE> 14
aggregate of $68,808 to BCL in lease payments. The lease expires on January 1,
2001, but is extendible for a ten-year period at the option of Company. The
Company believes that the rate (per square foot) that is charged for this
facility is similar to rates charged by third parties for comparable properties
in the Avon area.
During 1996, the Company used an airplane owned by Lake Creek Research LLC
("Lake Creek"), a limited liability company of which Terence M. Graunke is the
99% owner. The Company paid $405,000 to Lake Creek during 1996 for travel
expenses related to the Company's use of the airplane. The amounts paid by the
Company to Lake Creek for use of the airplane approximated first-class
commercial flight rates. As of December 31, 1996, the Company had prepaid
$186,000 to this entity which is recorded as a prepaid asset on the Company's
balance sheet. For 1997, the Company will pay Lake Creek a rate not to exceed
$750.00 per flight hour.
Mastering Computers, a wholly-owned subsidiary of the Company, paid
expenses of approximately $1,327,000 in 1996 for printing, film work, data
processing, marketing and mailing related to Mastering Computers' ongoing
direct-mail campaigns and newsletter printing and mailing, which involved
approximately 4,345,000 direct-mail pieces. These amounts were paid to Strategic
Direct Services, Inc. ("SDS"), a company wholly owned by David Graunke, who is
the brother of Terence M. Graunke and Thomas R. Graunke, and to G&A Associates
("G&A"), a company wholly owned by Gerald Graunke, the father of Terence M.
Graunke and Thomas R. Graunke, both under agreements entered into prior to the
Company's merger with Mastering Computers in August 1996. Amounts paid to SDS
and G&A include a fee to manage all aspects of the direct mail campaign and
newsletter printing and mailing, and an amount to pay third-party vendors
contracted with to provide the services. During 1996, Mastering Computers
arranged with G&A to have the fee be 15% of all submitted third party vendor
invoices. Management believes that the amounts paid for those services are
comparable to those that would be paid to unaffiliated companies for similar
services
During 1996, the Company paid approximately $185,000 for consulting
services to Gerald Graunke, the father of Terence M. Graunke and Thomas R.
Graunke, primarily under an agreement entered into by Mastering Computers prior
to its merger with the Company. This agreement was terminated in 1996.
Pursuant to a Contingent Promissory Note, dated September 29, 1995 (the
"Contingent Note"), issued by Terence M. Graunke in favor of the Company, Mr.
Graunke committed to pay the Company the amount of proceeds in excess of
$500,000, if any, received by Mr. Graunke from the sale of shares of Allin
Communications Corporation (as successor in interest to Sea Vision, Inc.) held
by Mr. Graunke as of such date (the "Allin Shares"). Pursuant to a letter
agreement, dated March 31, 1997 (the "Letter Agreement"), Mr. Graunke and the
Company evidenced their respective interpretations of certain terms of the
Contingent Note and agreed to certain procedures with respect to the sale of the
Allin Shares. The Letter Agreement (i) provides that the term "proceeds" does
not include payments received by Mr. Graunke with respect to loans and other
advances made by Mr. Graunke to Sea Vision, Inc., (ii) sets forth procedures by
which the Company may cause the sale of the Allin Shares, and by which Mr.
Graunke may segregate and retain a portion of the Allin Shares having a market
value of approximately $500,000 (the "Segregated Shares"), and (iii) provides
that at such time as the value of the Segregated Shares is equal to $500,000,
the Company may request that all of the Allin Shares (other than the Segregated
Shares) be transferred to the Company. After completion of such transfer, the
Letter Agreement provides that the Letter Agreement and the Contingent Note
shall terminate. The Letter Agreement was subject to the approval of all
non-interested members of the Board of Directors, which approval was obtained by
written consent on April 28, 1997.
Peter I. Mason, a director of the Company, is a partner in the law firm of
Freeborn & Peters, which has served as outside counsel to the Company since
1995.
PROPOSAL 2. AMENDMENT TO THE 1995 EXECUTIVE STOCK OPTION PLAN
Stockholders are being asked to vote upon a proposal to approve an
amendment to the Company's 1995 Executive Stock Option Plan (the "Executive
Plan") that will increase the number of shares available for issuance thereunder
by 1,500,000 shares. The proposed amendment has been adopted by the Board of
Directors, subject to stockholder approval at the Annual Meeting. Since the
inception of the Executive Plan,
12
<PAGE> 15
the Company has utilized option grants to facilitate growth through new hires
and acquisitions. The Board believes the amendment is necessary to provide the
Company with a sufficient reserve of Common Stock for future option grants to
attract and retain the services of executives, directors and key employees who
are essential to the Company's long-term success.
The following description of the general features of the Executive Plan is
qualified in its entirety by reference to the full text of the plan, a copy of
which may be obtained without charge upon written request to the Company's
Secretary.
Under the Executive Plan, incentive stock options ("ISOs"), as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
non-qualified options may be granted to employees, independent contractors,
officers and directors of the Company or any subsidiary. See "PROPOSAL 1.
ELECTION OF DIRECTORS -- Compensation of Directors." A total of 3,000,000 shares
of Common Stock were reserved for issuance under the Executive Plan.
Approximately 14 individuals currently are eligible to receive options under the
Executive Plan. As of March 31, 1997 approximately 104,000 shares were available
for new grants under the Executive Plan, exclusive of options to purchase
200,000, 300,000, 150,000 and 75,000 shares which were granted to Terence M.
Graunke, Kevin Rowe, Thomas R. Graunke, and Marc Pinto, respectively, subject to
stockholder approval of this amendment to the Executive Plan. See "Executive
Compensation." Shares that are subject to options granted under the Executive
Plan but which are not issued because such options expire or are otherwise
terminated or canceled will again become available for issuance upon such
expiration or cancellation. The Executive Plan may be administered by the
Compensation Committee or the Board (the "Administrator") which, subject to the
terms of the Executive Plan, has the authority to determine the material terms
and provisions under which options are granted, including the individuals to
whom such options may be granted, exercise prices and numbers of shares subject
to options, the time or times during which options may be exercised and certain
other terms and conditions of the options granted. The Board and the
Compensation Committee may from time to time withdraw or amend the Executive
Plan provided the Board and the Compensation Committee may not (i) withdraw or
cancel any outstanding option without the consent of the option holder, or (ii)
increase the number of shares reserved for issuance thereunder without
stockholder approval within one year of such amendment. Options granted under
the Executive Plan generally have a term of ten years.
The exercise price of ISOs granted under the Executive Plan may not be less
than 100% of the fair market value of the Common Stock on the date of grant and,
in the case of ISOs granted to holders of more than 10% of the voting stock of
the Company or any subsidiary, not less than 110% of the fair market value of
the Common Stock on the date of grant. The exercise price of non-qualified
options is determined by the Administrator and may be less than, equal to or
greater than the fair market value of the Common Stock on the date of grant.
ISOs granted to holders of more than 10% of the voting stock of the Company or
any subsidiary may not be exercised later than five years from the date of
grant, and other options granted under the Executive Plan may not be exercised
later than ten years from the date of grant. The aggregate fair market value
(determined at the time of grant) of shares issuable upon the exercise of ISOs
granted to an optionee under all plans of the Company or any subsidiary that
become exercisable for the first time during any one calendar year may not
exceed $100,000. In no case may options representing in excess of 1,500,000
shares of Common Stock be granted to any participant in the Executive Plan in
any five-year period.
Options granted under the Executive Plan become exercisable in four equal
annual installments beginning on the first anniversary of the date of grant,
unless, on the date of grant, the Administrator specifies a shorter or longer
period in any particular case. Options granted to non-employee directors
generally become exercisable in three equal annual installments beginning on the
first anniversary of the date of grant. Prior to the Company's initial public
offering on March 21, 1996, the Company issued certain options which became
exercisable shortly following the offering (the "Special Options"). The Company
does not intend to grant any additional Special Options.
All or any part of any unexercised option may be exercised, whether or not
then vested, by an optionee upon a "change of control" of the Company or upon
the occurrence of any other event which, in the sole discretion of the
Administrator, deserves special consideration. A "change of control" is defined
in the
13
<PAGE> 16
Executive Plan as the earlier of the acquisition by any person, or persons
acting in concert, of securities having more than 50% of the voting power of the
Company or the date on which a person first discloses an intent to commence a
tender offer for securities having more than 50% of the voting power of the
Company.
Except as otherwise provided by the Administrator, options granted under
the Executive Plan are not transferable, except to certain family members (or
entities comprised of, or established for the benefit of, certain family
members) and except to the extent that the representative of the estate or the
heirs of a deceased option holder are permitted to exercise such options, and,
during such holder's lifetime, are exercisable only by the holder or by his or
her legal representative. Options granted under the Executive Plan generally
terminate three months after the holder ceases to be an employee, director or
independent contractor of the Company or any subsidiary which may be extended in
the discretion of the Administrator up to six months for non-qualified options,
except in the case of death or disability, in which event vested options may be
exercised at any time within one year following the date of death or disability.
In no event may an option be exercised later than the originally prescribed term
of the option. The Executive Plan will terminate in September 2005 unless
previously terminated by the Board of Directors. The last sale price of the
Common Stock on April 23, 1997 was 11 3/8 per share, as reported by the Nasdaq
Stock Market.
A person who is granted a stock option under the Executive Plan will not be
subject to federal income tax at the time of grant, and the Company will not be
entitled to a tax deduction by reason of such grant. Upon exercise of a
non-qualified option, the difference between the exercise price and the fair
market value of the stock on the date of exercise will be taxable as ordinary
income in the taxable period in which the exercise occurs, and the Company will
be entitled to a corresponding deduction, to the extent permitted under Section
162(m) of the Code. The Company will be entitled to the deduction at the same
time the employee recognizes income and in an amount equal to the amount of
ordinary income recognized by the employee, provided the Company reports such
income recognition to the Internal Revenue Service.
Although no taxable income will be recognized by the employee upon exercise
of an ISO and the Company is not entitled to a tax deduction by reason of such
exercise, the excess of the fair market value on the date of exercise over the
exercise price is an adjustment which increases alternative minimum taxable
income, the base upon which alternative minimum tax is computed. Upon the sale
or other disposition of the ISO shares after the later of (i) two years after
the grant date, and (ii) one year after the purchase date, any gain or loss will
be treated as a long-term capital gain or loss. The tax basis of the option
shares in such case generally equals the exercise price. The Company will not be
entitled to a tax deduction with respect to the ISO shares under these
circumstances. If stock purchased pursuant to the exercise of an ISO is sold
within two years from the date of grant of the option or within one year after
the transfer of stock to the employee pursuant to exercise of the ISO, then the
difference between the exercise price and the lesser of (i) the fair market
value of the Company's Common Stock at the date of purchase, or (ii) the sales
price, will be taxable as ordinary income and the Company will be entitled to a
corresponding deduction, to the extent permitted under Section 162(m).
As described above, the Company is generally entitled to an income tax
deduction for any compensation income taxed to participants in the Executive
Plan. Under Section 162(m) of the Code, however, unless the compensation meets
the stockholder approval and other requirements of Section 162(m), the Company
would not be entitled to a deduction for compensation paid to certain covered
executives to the extent the compensation paid to any such person exceeds $1
million. The Executive Plan is designed to meet the stockholder approval and
other requirements of Section 162(m).
14
<PAGE> 17
The table below sets forth, as of March 31, 1997, the number of options
granted to the specified persons and groups under the Executive Plan since its
inception in 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NAME AND POSITION UNDERLYING OPTIONS
----------------- --------------------
<S> <C>
Terence M. Graunke, Chairman of the Board, President and
Chief Executive Officer................................... 629,600(1)
Kevin Rowe, Executive Vice President and General Manager,
Interactive Development Group............................. 300,000(1)
Thomas R. Graunke, Executive Vice President and General
Manager, Corporate Training Group......................... 405,000(1)
Marc Pinto, Executive Vice President and Chief Financial
Officer................................................... 371,100(1)
Melinda Gladitsch, Executive Vice President................. 347,400
Andrew J. Filipowski, Director.............................. 34,800
Peter I. Mason, Director.................................... 19,800
All current executive officers as a group (4 persons)....... 1,705,700(1)
All current directors (other than executive officers) as a
group (6 persons)......................................... 193,800
All employees, including all current officers who are not
executive officers, as a group (495 persons).............. 1,543,828
</TABLE>
- ---------------
(1) Includes 200,000, 300,000, 150,000 and 75,000 shares underlying options
granted under the 1995 Executive Plan to Terence M. Graunke, Kevin Rowe,
Thomas R. Graunke and Marc Pinto, respectively, which are subject to
approval by the Company's stockholders of the amendment to increase the
number of shares available for issuance thereunder by 1,500,000 shares. In
the event the amendment is not approved by the stockholders, Mr. Rowe is
entitled to stock appreciation rights, a bonus or other form of compensation
in lieu of the options.
NEW PLAN BENEFITS
The table below sets forth, with respect to the persons and groups
specified therein and as of March 31, 1997, the number of shares underlying
options that have been granted subject to stockholder approval of Proposal 2,
and the weighted average exercise price of such options. These grants are also
included in the table above. In addition to these grants, each non-employee
director will be granted an option to purchase 15,000 shares under the Executive
Plan when they first become a non-employee director, and an additional grant on
the third anniversary of the initial grant if they continue to serve as
directors on such date. See "PROPOSAL 1. ELECTION OF DIRECTORS -- Compensation
of Directors." On the date hereof, Messrs. Carbery, Cowell, Filipowski,
Goldstein, Mason and Ness serve as non-employee directors.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES WEIGHTED
UNDERLYING AVERAGE
NAME AND POSITION OPTIONS EXERCISE PRICE
----------------- ---------- --------------
<S> <C> <C>
Mr. Terence M. Graunke, Chairman of the Board, President and
Chief Executive Officer................................... 200,000 $6.50
Mr. Kevin Rowe, Executive Vice President and General
Manager, Interactive Development Group.................... 300,000 5.75
Mr. Thomas R. Graunke, Executive Vice President and General
Manager, Corporate Training Group......................... 150,000 6.50
Mr. Marc Pinto, Executive Vice President and Chief Financial
Officer................................................... 75,000 6.50
All current executive officers as a group (4 persons)....... 725,000 6.19
All current directors who are not executive officers as a
group (6 persons)......................................... -0- --
All employees, including all current officers who are not
executive officers, as a group (495 persons).............. -0- --
</TABLE>
15
<PAGE> 18
The affirmative vote of a majority of the shares of Common Stock present,
in person or by proxy, at the Annual Meeting and entitled to vote is required
for approval of the amendment to the Executive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE EXECUTIVE PLAN.
PROPOSAL 3. AMENDMENT TO THE 1995 EMPLOYEE STOCK OPTION PLAN
Stockholders are also being asked to vote upon a proposal to approve an
amendment to the Company's 1995 Employee Stock Option Plan (the "Employee Plan")
that will increase the number of shares available for issuance thereunder by
900,000 shares. The proposed amendment has been adopted by the Board of
Directors, subject to stockholder approval at the Annual Meeting. Since the
inception of the Employee Plan, the Company has utilized option grants to
facilitate growth through new hires and acquisitions. The Board believes the
amendment is necessary to provide the Company with a sufficient reserve of
Common Stock for future option grants to attract and retain the services of
technical, sales and marketing and other key employees who are essential to the
Company's long-term success.
The following description of the general features of the Employee Plan is
qualified in its entirety by reference to the full text of the plan, a copy of
which may be obtained without charge upon written request to the Company's
Secretary.
Directors and executive officers of the Company who are subject to Section
16 of the Securities Exchange Act of 1934 are not eligible to participate in the
Employee Plan. Under the Employee Plan, ISOs and non-qualified stock options may
be granted to employees, independent contractors and officers (who are not
subject to Section 16) of the Company and its subsidiaries. A total of 600,000
shares of Common Stock were reserved for issuance under the Employee Plan. As of
March 31, 1997, approximately 26,600 shares were available for new grants under
the Employee Plan. The Employee Plan does not provide for the Grant of Special
Options as provided in the Executive Plan. In no case may options representing
in excess of 60,000 shares of Common Stock be granted to any participant in the
Employee Plan within any five-year period. The Employee Plan may be administered
by the Compensation Committee or the Board of Directors and its terms and
conditions are substantially similar to the terms of the Executive Plan. See
"PROPOSAL 2. AMENDMENT TO THE 1995 EXECUTIVE STOCK OPTION PLAN."
The affirmative vote of a majority of the shares of Common Stock present,
in person or by proxy, at the Annual Meeting and entitled to vote is required
for approval of the amendment to the Employee Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE EMPLOYEE PLAN.
PROPOSAL 4. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors of the
Company has selected Arthur Andersen LLP as independent public accountants to
audit the consolidated financial statements of the Company for the year ending
December 31, 1997, and has directed that this selection be presented to the
stockholders for ratification at the Annual Meeting. Arthur Andersen LLP has
audited the Company's financial statements since inception. It is anticipated
that representatives of Arthur Andersen LLP will attend the Annual Meeting, will
have the opportunity to make a statement and will be available to respond to
questions from stockholders.
The affirmative vote of a majority of the shares of Common Stock present,
in person or by proxy, at the Annual Meeting and entitled to vote is required to
ratify the selection of Arthur Andersen LLP. In the event stockholders fail to
ratify the appointment of Arthur Andersen LLP, the Board of Directors will
reconsider its selection. Even if the selection is ratified, the Board of
Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time if the Board of Directors determines
that such a change would be in the best interests of the Company and its
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
16
<PAGE> 19
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented at the
Annual Meeting other than those listed in the notice of the meeting. If any
other matters do come before the Annual Meeting, it is intended that the holders
of proxies solicited by the Board of Directors will vote on such other matters
in their discretion in accordance with their best judgment.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN
REQUEST ADDRESSED TO THE CORPORATE SECRETARY OF EAGLE RIVER INTERACTIVE, INC.,
P.O. BOX 3600, 1060 W. BEAVER CREEK BLVD., AVON, CO 81620.
STOCKHOLDER PROPOSALS
In the event any stockholder intends to present a proposal at the Annual
Meeting of Stockholders to be held in 1998, such proposal must be received by
the Secretary of the Company, in writing, on or before December 29, 1997 to be
considered for inclusion in the Company's proxy materials relating to that
meeting.
By Order of the Board of Directors
/s/ MARC PINTO
Marc Pinto
Executive Vice President,
Avon, Colorado Chief Financial Officer,
April 29, 1997 and Corporate Secretary
17
<PAGE> 20
APPENDIX A
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Company:
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,*
-----------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue.............................. $8,326 $8,400 $11,182 $20,785 $39,264
Operating expenses................... 8,233 8,800 11,616 22,814 46,200
Net income (loss) from continuing
operations......................... 55 (421) (548) (2,629) (3,090)
Net income (loss) from continuing
operations per share(a)............ (.25)
Weighted average shares outstanding
at year end(a)..................... 12,285,782
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,*
-----------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total assets......................... $1,911 $2,938 $ 2,949 $13,653 $58,270
Total long-term liabilities.......... 103 214 1,555 3,153 804
Total stockholders' equity........... 670 (4) (705) (3,542) 49,914
</TABLE>
- ---------------
* All historical data has been restated to reflect pooling of interests
business combinations which occurred in 1996.
(a) Historical income (loss) from continuing operations per share is not
presented, as it is not considered relevant given the Company's 1996 capital
restructuring.
The following table sets forth selected financial data of SkiView, Inc.,
the predecessor entity (the "Predecessor Business") that operated the business
currently conducted by SkiView, for the four-fiscal-year period ended April 30,
1994, and for the eight months ended December 31, 1994. The selected financial
data of the Predecessor Business for the fiscal years ended April 30, 1993 and
1994, and for the eight months ended December 31, 1994 have been derived from
the Predecessor Business' financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
<TABLE>
<CAPTION>
PREDECESSOR BUSINESS(1)
----------------------------------------------------------
EIGHT
YEARS ENDED APRIL 30, MONTHS ENDED
------------------------------------------- DECEMBER 31,
1991 1992 1993 1994 1994
----------- ------- ------- ------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................. $ 3,026 $ 3,677 $ 3,510 $ 2,811 $ 987
Operating expenses.................. 2,997 3,279 3,378 3,037 1,800
Net loss............................ (747) (295) (438) (406) (369)
BALANCE SHEET DATA:
Total assets........................ $ 2,416 $ 2,798 $ 2,844 $ 2,366 $ 3,745
Total long-term obligations (current
and non-current portions)........ 7,591 8,083 8,631 8,775 8,310
Total stockholders' (deficit)....... (5,381) (5,678) (6,116) (6,522) (6,891)
</TABLE>
- ---------------
(1) Effective January 1, 1995, the Company acquired the assets and assumed
certain liabilities of the Predecessor Business. Due to the significance of
the SkiView business to the Company's operations, the financial statements
of the Predecessor Business have been included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
A-1
<PAGE> 21
1995 EXECUTIVE STOCK OPTION PLAN
OF
EAGLE RIVER INTERACTIVE, INC.
AMENDED AND RESTATED AS OF DECEMBER 18, 1996*
1. Introduction and Purpose. The purpose of this Plan is to
advance the interests of the Corporation by encouraging and enabling the
acquisition of a proprietary interest in the Corporation by Eligible
Participants upon whose judgment and keen interest the Corporation and its
Subsidiaries are largely dependent for the successful conduct of their service
and operations. It is anticipated that the acquisition of such proprietary
interest in the Corporation will stimulate the efforts of such Eligible
Participants on behalf of the Corporation and its Subsidiaries, and strengthen
their desire to remain with the Corporation and its Subsidiaries. It is also
expected that the opportunity to acquire such a proprietary interest will
foster the efforts of the Corporation and its Subsidiaries to attract desirable
personnel.
2. Definitions. When used in this Plan, unless the context
otherwise requires:
a. "Administrator" means the Board of Directors or the Committee.
b. "Board of Directors" or "Board" means the Board of Directors
of the Corporation as constituted at any time.
c. "Change in Control" means the earlier of (i) the date on which
any person or entity, or persons or entities acting in concert, shall acquire
the beneficial ownership, as defined by the Board of Directors in its sole
discretion, of Shares or other securities having more than fifty percent (50%)
of the Voting Power then outstanding, or (ii) the date on which any person or
entity, or persons or entities acting in concert, shall first disclose an
intent to commence an offer to tender for Shares or other securities having
more than fifty percent (50%) of the Voting Power.
d. "Committee" means the Compensation Committee, as described in
Section 3 hereof, appointed by the Board to administer this Plan.
e. "Common Stock" means the common stock of the Corporation, par
value $.001 per share, including both treasury shares and authorized but
unissued shares, or any security of the Corporation issued in substitution,
exchange or in lieu thereof.
f. "Corporation" means Eagle River Interactive, Inc.
g. "Eligible Participants" means any employee, officer or
director of, or consultant to, the Corporation or its Subsidiaries designated
to receive Options pursuant to this Plan, as provided in Sections 3 and 4.
__________________________________
* The amendment which increases the number of Shares available under this
Plan is subject to stockholder approval.
<PAGE> 22
h. "Fair Market Value" on a specified date means (i) the closing
price at which a Share is quoted on such date if quoted on the Nasdaq Stock
Market or listed on a national securities exchange on which Shares are
primarily traded; or (ii) if the Shares are not so quoted or listed on such
date, then the average of the bid and asked closing prices at which one Share
is traded on the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"); but if
no Shares were traded on such date, then on the last previous date on which a
Share was so traded, or (iii) if none of the above is applicable, the value of
a Share as established by the Administrator for such date using any reasonable
method of valuation.
i. "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor thereto.
j. "Issue Date" means the date designated by the Administrator
with reference to which the exercisability of an Eligible Participant's Options
may be determined in accordance with Section 5 hereof. Unless otherwise
designated by the Administrator, the Issue Date of an Option shall be the date
that the Option is awarded to the Eligible Participant.
k. "Options" means the stock options granted pursuant to this
Plan.
l. "Plan" means this Executive Stock Option Plan, as amended from
time to time.
m. "Plan Year" means the calendar year.
n. "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, or any
successor thereto.
o. "Securities Exchange Act of 1934" means the Securities
Exchange Act of 1934, as amended from time to time, or any successor thereto.
p. "Share" means a share of Common Stock of the Corporation, par
value $.001.
q. "Special Option Share" has the meaning assigned in Section 5
hereof.
r. "Standard Option Share" has the meaning assigned in Section 5
hereof.
s. "Subsidiary" means any "subsidiary corporation", as such term
is defined in Section 424(f) of the Internal Revenue Code.
t. "Voting Power" means the voting power of any securities of the
Corporation then outstanding which are generally entitled to vote for the
election of directors of the Corporation.
3. Administration of the Plan. The Plan shall be administered by
the Board of Directors or the Committee. The Committee shall be appointed by
the Board of Directors and shall consist of at least two members of the Board
of Directors. Insofar as it is necessary for compliance with the requirements
of Section 16 of the Securities Exchange Act of 1934, each
2
<PAGE> 23
member of the Committee must be a "Non-Employee Director" within the meaning of
the rules promulgated pursuant to Section 16 of the Securities Exchange Act of
1934. Insofar as the Administrator deems it is desirable and necessary in
order for compensation recognized by Eligible Participants pursuant to the Plan
to be fully deductible by the Corporation for federal income tax purposes, each
member of the Committee shall also be an "outside director" (as defined in
Treasury Regulations issued under Section 162(m) of the Internal Revenue Code).
The Administrator shall have the authority to administer the Plan as provided
herein and, in exercising this authority, shall establish such rules and
procedures as it deems necessary or advisable to administer the Plan.
Each member of the Committee shall hold office until the next regular
annual meeting of the Board of Directors following his or her designation and
until his or her successor is designated as a member of the Committee. Any
vacancy in the Committee may be filled by a resolution adopted by a majority of
the Board of Directors. Any member of the Committee may be removed at any
time, with or without cause, by resolution adopted by a majority of the Board
of Directors. A member of the Committee may resign from the Committee at any
time by giving written notice to the President, Secretary or Assistant
Secretary of the Corporation in person or by certified or registered mail,
return receipt requested, sent to P.O. Box 3600, 1060 West Beaver Creek Blvd.,
Avon, Colorado 81620, and, unless otherwise specified therein, such
resignation shall take effect upon receipt of such written notice. The
acceptance of such resignation by the President, Secretary or Assistant
Secretary of the Corporation shall not be necessary for such resignation to be
made effective.
In accordance with the terms of this Section 3, at all times after the
Corporation registers any class of equity security (other than an exempt
security) pursuant to Section 12 of the Securities Exchange Act of 1934, all
members of the Board of Directors who are not employees of the Corporation
shall receive Options under the Plan without any action by the Administrator.
Each non-employee member of the Board shall receive an Option to purchase
15,000 Standard Option Shares (after giving effect to the three-for-one stock
split effected by the Corporation on March 21, 1996, hereafter referred to as
the "Stock Split," and subject to adjustment for stock splits, stock dividends
and other share adjustments described in Section 14 hereof), which shall be
granted on and have an Issue Date of that date which is the later of (i) the
date such person is first appointed or elected or (ii) with respect to any such
person who has received Options prior to December 22, 1995, the date on which
all Options previously granted to such person have become immediately
exercisable (other than as a result of a Change of Control as provided in
Section 10 hereof). As long as he or she shall continue to serve on the Board,
each continuing non-employee member of the Board shall receive an additional
Option to purchase 15,000 Shares (after giving effect to the Stock Split, and
subject to adjustment for stock splits, stock dividends and other share
adjustments described in Section 14 hereof), every three years on the
anniversary of the Issue Date of the first such Option granted to him or her
pursuant to this Section 3, and the Issue Date of such Options shall be the
date of granting. Options granted to non-employee members of the Board
pursuant to this Section 3 shall become exercisable in three (3) equal annual
installments on the first three (3) anniversaries of the Issue Date. The
exercise price of any Option granted to a Board member pursuant to this Section
3 shall be equal to the Fair Market Value as of the Issue Date and each such
Option shall have a term of ten (10) years.
3
<PAGE> 24
4. Participants. Except as otherwise provided herein, the class
of individuals who are potential recipients of Options to be granted under this
Plan are the Eligible Participants who, in the sole discretion of the
Administrator, contribute significantly to the success of the Corporation or
any of its Subsidiaries. The Eligible Participants to whom Options are granted
under this Plan and the number of Shares subject to each such Option shall be
determined by the Administrator in its sole discretion, in accordance with the
terms and conditions of this Plan. Notwithstanding the foregoing, the Options
granted to non-employee directors pursuant to Section 3 above shall be as set
forth therein.
5. Grant and Vesting of Options. The Administrator may, but
shall not be required to, grant in accordance with this Plan Options to
purchase an aggregate of up to 4,500,000 Shares (after giving effect to the
Stock Split and subject to adjustment for stock splits, stock dividends and
other share adjustments described in Section 14 hereof), which Shares may be
either treasury Shares or authorized but unissued Shares, classified as
follows: 3,750,000 shares shall be "Standard Option Shares" and the remaining
750,000 shares shall be "Special Option Shares" which will be subject to the
special vesting requirements of this Section 5. In no event may an Eligible
Participant be granted Options under the Plan to the extent that the sum of (i)
the number of Shares subject to such Options, and (ii) the number of Shares
subject to all other prior Options granted to such Eligible Participant under
the Plan during the five-year period ending on the date such Options are
granted would exceed the Eligible Participant's Individual Limit. An Eligible
Participant's "Individual Limit" is 1,500,000 Shares (after giving effect to
the Stock Split and subject to adjustment for stock splits, stock dividends and
other share adjustments as described in Section 14 hereof).
Except as otherwise provided in this Plan, Options granted pursuant to
this Plan for the purchase of Standard Option Shares shall become exercisable
in four equal annual installments on the first four anniversaries of the Issue
Date of such Options; provided, however, that the Administrator may in its
discretion specify, upon the Option grant and with respect to all or any
portion of the Shares subject to such Options, immediate exercisability or
exercisability vesting over a shorter or longer period in any particular case.
Except as otherwise provided herein, Options granted pursuant to this
Plan for the purchase of Special Option Shares shall become exercisable on the
fourth anniversary of the Issue Date of such Options. Options to purchase
Special Option Shares may be exercised in full, to the extent they are not then
vested and exercisable, in the amounts and upon the occurrence of the events
described in this Section 5. As used herein, "Frontenac" means Frontenac VI
Limited Partnership, the holder of 1,000,000 shares of Series A Convertible
Preferred Stock of the Corporation (the "Series A Preferred"), which shares
were purchased by Frontenac for the purchase price of $5,000,000 (the "Original
Investment Amount"). To the extent an Option to purchase Special Option Shares
is not then vested and exercisable, such Option shall vest and become
exercisable as follows:
(i) An amount such that twenty percent (20%) of any Special Option
Share grant may be exercised on and after the date that the
"Investment Recovery Amount" (as hereafter defined) equals or exceeds
the product of three times the Original Investment Amount, calculated
in the aggregate;
4
<PAGE> 25
(ii) An amount such that an additional forty percent (40%) of any
Special Option Share grant may be exercised on and after the date that
the Investment Recovery Amount equals or exceeds the product of five
times the Original Investment Amount, calculated in the aggregate; and
(iii) An amount such that the remaining forty percent (40%) of any
Special Option Share grant may be exercised on and after the date that
the Investment Recovery Amount equals or exceeds the product of seven
times the Investment Amount, calculated in the aggregate.
"Investment Recovery Amount" means the sum of:
(i) the amount of any dividends or other distributions,
whether in the form of cash or other property (valued at its fair
market value), paid or otherwise distributed by the Corporation to
Frontenac on account of its holdings of shares of Series A Preferred
(or Common Stock into which its shares of Series A Preferred have been
converted, hereafter, the "Underlying Common"); and
(ii) the amount of cash and other property (valued at its fair
market value) paid or otherwise distributed to Frontenac upon the
conversion, redemption, sale, or other disposition of all or any part
of the shares of Series A Preferred or Underlying Common held by
Frontenac, excluding any deduction for brokers fees or other
commissions payable by Frontenac upon any such sale or disposition;
and
(iii) at such time as the Company's Common Stock is traded on
a national securities exchange or on the National Association of
Securities Dealers Automated Quotation System over-the-counter market,
the product of:
(x) the average closing price per share of Common
Stock on such securities exchange, if any, on which such
shares are primarily traded (or, for shares traded on the
over-the-counter market as reported on the National
Association of Securities Dealers Automated Quotation System,
the average of the bid and asked closing prices at which one
share is traded), but if no shares were so traded on such
date, then on the last previous date on which a share was so
traded, as reported by The Wall Street Journal, with such
average price, in each case, determined over fifteen
consecutive trading days; times
(y) the sum of (i) the number of shares of Common
Stock into which the shares of Series A Preferred held by
Frontenac may be converted, and (ii) the number of shares of
Underlying Common held by Frontenac.
Options granted under this Plan may be either non-qualified stock
options or, with respect to Eligible Participants who are employees of the
Corporation or its Subsidiaries, incentive stock options within the meaning of
Section 422 of the Internal Revenue Code. An Option granted under this Plan
shall be deemed to be a non-qualified stock option unless the Administrator, in
its sole discretion, designates otherwise. Options which are designated or
deemed not to be
5
<PAGE> 26
incentive stock options shall not be treated as such for purposes of this Plan
and the Internal Revenue Code.
Nothing contained herein shall be construed to prohibit the grant of
Options at different times to the same Eligible Participant.
The terms of any Option granted to an Eligible Participant shall,
subject to the other terms and provisions of this Plan, be conclusively
determined by the Administrator, in its sole discretion at or before the time
of grant. The terms and provisions of the Option shall be set forth in a
writing (such writing being hereinafter referred to as the "Option
Certificate") signed on behalf of the Corporation by the President, any Vice
President or the Treasurer of the Corporation. The Option Certificate shall
state whether the Option is an incentive stock option or a non-qualified stock
option. At the time an Option is granted, the Administrator may, in its sole
discretion, establish one or more conditions to the exercise of such Option,
provided that if such Option is designated as an incentive stock option, then
such condition or conditions shall not be inconsistent with Section 422 of the
Internal Revenue Code.
6. Price. Except as otherwise provided herein, the exercise
price per Share of the Shares subject to purchase pursuant to any Option shall
be fixed by the Administrator at the time an Option is granted and may be less
than, equal to, or greater than the Fair Market Value of the Common Stock on
the date such Option is granted; provided, however, that if the Option is an
incentive stock option, in no event shall the price be less than the Fair
Market Value of a Share on the day on which the Option is granted (one hundred
ten percent (110%) of the Fair Market Value of a Share on such date if the
grantee is a greater than ten percent (10%) stockholder within the meaning of
Section 422(b)(6) of the Internal Revenue Code).
7. Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Administrator, in its sole
discretion, but no more than ten (10) years from the date upon which the Option
is granted (five (5) years if the Option is an incentive stock option and the
grantee is a greater than ten percent (10%) stockholder within the meaning of
Section 422(b)(6) of the Internal Revenue Code).
8. Option Holder Not a Stockholder. An Option holder shall not
be deemed to be the holder of, or to have any rights of a stockholder with
respect to, any Shares subject to such Option, unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Corporation
shall have issued and delivered a certificate representing the Shares to the
Option holder, and (iii) said holder's name shall have been entered as a
stockholder of record on the books of the Corporation. Thereupon, said holder
shall have full voting, dividend and other ownership rights with respect to
such Shares.
9. Transferability of Options. Except as expressly provided in
this Section 9, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than (i) by will or by the laws
of descent or distribution, and (ii) pursuant to a domestic relations order
issued by a court with jurisdiction over the Option holder. In no event,
however, will an Option be transferable if such transfer is prohibited by the
securities laws or regulations of any state, including but not limited to the
State of California.
6
<PAGE> 27
The Administrator may, in its sole discretion after considering the
relevant facts and circumstances, authorize the transfer by an Eligible
Participant of all or a portion of the Options granted or to be granted to such
Eligible Participant to:
(i) the spouse, children or grandchildren of the Eligible Participant
("Immediate Family Members");
(ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members;
(iii) a partnership or limited liability company in which such
Immediate Family Members and the Eligible Participant are the only
partners or members, as applicable; or
(iv) such other persons or entities as the Administrator permits,
provided that (a) the Option Certificate (as defined in Section 5 of this Plan)
pursuant to which such Options are granted must be approved by the
Administrator, and must expressly provide (or be amended to so provide) for
transferability in a manner consistent with this Section and (b) subsequent
transfers of transferred Options (including indirect transfers through the
transfer of, for example, an ownership interest in the entity to which an
Option is transferred) shall be prohibited except those in accordance with the
first paragraph of this Section 9 (by will, the laws of descent and
distribution or pursuant to a domestic relations order). In consideration for
authorizing the transferability of an Option, the Administrator may impose such
restrictions on the sale of the Option Shares underlying the transferred Option
as it deems appropriate after considering the facts and circumstances of the
Option transfer.
Options which have been transferred shall continue to be subject to
the same terms and conditions as were applicable immediately prior to the
transfer, provided that for purposes of this Plan the term "Eligible
Participant" shall be deemed to refer to the transferee. The events of
termination of employment of Section 13 hereof shall continue to be applied
with respect to the original Eligible Participant, following which the Options
shall be exercisable by the transferee only to the extent and for the periods
specified in Section 13. In no event shall the Corporation be obligated to
provide notice to an Option transferee of any of the events specified in
Section 13 or of any other event or circumstance which may relate to the
transferred Option.
10. Exercise of Options. Except as otherwise provided herein, an
Option, after the grant thereof in accordance with the provisions of this Plan,
shall be exercisable by the holder of such Option at such rate and at such time
or times as may be fixed by the Administrator at the time the Option is
granted; provided, however, that no Option may be exercised in part or in full
prior to the approval of the Plan by a majority vote of the stockholders of the
Corporation as provided in Section 18 hereof.
Notwithstanding any other provisions of this Plan, any Option granted
under the Plan which is an incentive stock option shall not be exercisable to
the extent that the Fair Market Value of the Shares (determined as of the date
of grant), with respect to which such Option (and any other incentive stock
option granted to the holder under this Plan or any other stock option
7
<PAGE> 28
plan maintained by the Corporation or any Subsidiary) first becomes exercisable
in any calendar year, exceeds $100,000.
All or any part of the unexpired and unexercised Options granted to
any Eligible Participant may be exercised in full, after approval of the Plan
by the stockholders of the Corporation as provided in Section 18 hereof,
whether or not such Options were otherwise then exercisable, upon a Change in
Control or upon the occurrence of such special circumstances or event which, in
the sole discretion of the Administrator, merits special consideration.
An Option shall be exercised by the delivery of a written notice duly
signed by the Option holder (or the representative of the estate or the heirs
of a deceased Option holder), together with the Option Certificate and (i)
cash, (ii) a certified check payable to the order of the Corporation, (iii)
subject to the approval of the Administrator, Shares duly endorsed over to the
Corporation (which Shares shall have been owned by the Option holder for at
least six months prior to such exercise and, for purposes of this paragraph, be
valued at their Fair Market Value as of the date preceding the day of such
exercise), (iv) written direction to an authorized broker to sell the Shares
purchased pursuant to such exercise immediately for the account of the Option
holder and pay an appropriate portion of the proceeds thereof to the
Corporation, or (v) any combination of such methods of payment which together
amount to the full exercise price of the Shares purchased pursuant to the
exercise of the Option plus the amount, if any, of any applicable taxes which
the Corporation is required to withhold. Such notice and payment shall be
delivered to the Treasurer or Secretary of the Corporation, or to any other
person designated by the Corporation, in a written notice to the Option holder
(the "Authorized Representative").
No Option may be granted or exercised pursuant to the provisions
hereof when such Option, or the granting or exercise thereof, may result in the
violation of any law or governmental order or regulation.
Within a reasonable time after the exercise of an Option, the
Corporation shall cause to be delivered to the person entitled thereto a
certificate for the Shares purchased pursuant to the exercise of the Option.
If the Options shall have been exercised with respect to less than all of the
Shares subject to the Option, the Corporation shall (i) cause to be delivered
to the person entitled thereto a new Option Certificate in replacement of the
Option Certificate surrendered at the time of the exercise of the Option,
indicating the number of Shares with respect to which the Option remains
available of exercise, or (ii) endorse the original Option Certificate to give
effect to the partial exercise thereof.
An Option that is an incentive stock option granted pursuant hereto
shall be exercisable by an Eligible Participant only if such employee has been
in the employ of the Corporation or its Subsidiaries at all times during the
period beginning on the date such Option was granted and ending three (3)
months before the date of such exercise or one year before the date of exercise
in the case of death or disability, as set forth below in Section 13.
11. Disposition of Shares. If the Option is an incentive stock
option, no Shares acquired pursuant to the exercise of an Option granted herein
may be sold, exchanged, gifted or
8
<PAGE> 29
otherwise disposed of within two (2) years following the date such Option was
granted or one (1) year following the date such Option was exercised, whichever
is later.
12. Fractional Shares. The Corporation shall not be required to
issue fractional Shares pursuant to this Plan and, accordingly, Eligible
Participants may be required to purchase only a whole Share or Shares.
13. Termination of Services. All or any part of any Option, to
the extent unexercised, shall terminate immediately if the Option holder ceases
to be an employee, officer or director of, or consultant to, the Corporation or
its Subsidiaries; except that (i) with respect to Options granted before
December 22, 1995, the Option holder shall have until the end of the thirtieth
(30th) day, and (ii) with respect to Options granted on or after December 22,
1995, the Option holder shall have until the end of three (3) months
(extendible in the discretion of the Administrator for non-qualified Options
to the end of six (6) months), following the date he or she ceases to be an
employee, officer or director of, or consultant to, the Corporation or any of
its Subsidiaries to exercise any exercisable Option rights that he or she could
have exercised on the day on which such employment or service terminated;
provided, however, that such exercise must be accomplished prior to the
expiration of the term of such Option. Notwithstanding the foregoing, if an
individual ceases to be an employee or director of, or a consultant to, the
Corporation or its Subsidiaries due to (i) retirement on or after attaining the
age of sixty-five (65) years (or such earlier date as such person shall be
permitted under the Corporation's retirement plan), (ii) disability (as such
term is defined in Section 422(c)(6) of the Internal Revenue Code, the
existence of which shall be conclusively determined by the Administrator in its
sole discretion), or (iii) death, then the Option holder, or the representative
of the estate or the heirs of a deceased Option holder, shall have the
privilege of exercising the Options which are then exercisable but are
unexercised at the time of such retirement, disability or death, but only to
the extent that such Options which are then exercisable are exercised (i)
within three (3) months following the Option holder's retirement (extendible in
the discretion of the Administrator for non-qualified Options, to six (6)
months), (ii) within one (1) year following the Option holder's disability, or
(iii) within one (1) year following the Option holder's death, as the case may
be; provided, further, that such exercise must be accomplished prior to the
expiration of the term of such Option. If an Option holder ceases to be an
employee or director of, or a consultant to, the Corporation or its
Subsidiaries because of the Option holder's violation of his or her duties to
the Corporation and its Subsidiaries, the existence of such violation to be
conclusively determined by the Administrator in its sole discretion, all
unexercised Options of such Option holder shall immediately terminate and such
Option holder shall have no right to exercise any unexercised Option he or she
might have exercised prior to the date he or she ceased to be an employee or
director of, or a consultant to, the Corporation or its Subsidiaries.
When an Eligible Participant ceases to be an employee or director of,
or a consultant to, the Corporation or its Subsidiaries, all Options held by
such Eligible Participant which are not then exercisable shall immediately
lapse and be canceled.
Nothing contained herein or in the Option Certificate shall be
construed to confer on any Eligible Participant any right to continue in the
employ or service of the Corporation or its Subsidiaries or derogate from any
right of the Corporation or its Subsidiaries to request, in its
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<PAGE> 30
sole discretion, the retirement, resignation or discharge of such Eligible
Participant, at any time, with or without cause.
14. Adjustment of Shares. If, prior to the complete exercise of
any Option, there shall be declared and paid a stock dividend upon the Common
Stock of the Corporation or if the Common Stock of the Corporation shall be
split, converted, exchanged, reclassified or in any way substituted, the
Option, to the extent that it has not been exercised, shall entitle the holder
thereof, upon the future exercise of the Option in accordance with the Plan, to
such number and kind of securities, cash or other property, subject to the
terms of the Option, to which he or she would have been entitled had he or she
actually owned the Shares subject to the unexercised portion of the Option at
the time of the occurrence of such stock dividend, split, conversion, exchange,
reclassification or substitution; and the aggregate exercise price upon the
future exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder. If, prior to the complete exercise of
any Option, there shall be a spin-off transaction pursuant to the
reorganization of the Corporation, the Option, to the extent that it has not
been exercised, shall be adjusted by adjusting the exercise price of the Option
and adjusting the number of Shares subject thereto, in order to reflect the
decrease, if any, in the fair market value of the Shares resulting from the
spin-off transaction; in any such case, the Option as adjusted, shall entitle
the holder thereof, upon the future exercise of the Option in accordance with
the Plan, to the number of Shares which have a Fair Market Value, immediately
after the occurrence of the spin-off transaction, equal to the Fair Market
Value of the Shares subject to the Option on the day before the occurrence of
such spin-off transaction, and the aggregate exercise price upon the future
exercise of the Option shall be the same as the aggregate exercise price of the
Shares subject to the Option on the day before the occurrence of such spin-off
transaction. Any fractional shares or other securities payable upon the
exercise of the Option, as a result of such adjustment due to the occurrence of
such stock dividend, stock split, conversion, exchange, reclassification,
substitution or spin-off transaction, shall be payable in cash based upon the
Fair Market Value of such Shares or securities at the time of such exercise.
If any such event should occur, the number of Shares, with respect to which
Options remain to be issued or with respect to which Options may be reissued,
and the Individual Limit shall be adjusted in a similar manner.
Except as otherwise provided in the third paragraph of Section 10
hereof (relating to changes of control among other matters), upon the
dissolution or liquidation of the Corporation, or upon a reorganization, merger
or consolidation in which the Corporation is not the surviving corporation or
entity, or in which the Corporation becomes a subsidiary of another
corporation, or upon the sale of all or substantially all of the property of
the Corporation, both the Plan and the Options issued thereunder shall
terminate, unless a provision is made in connection with such transaction for
(i) the assumption of Options theretofore granted or (ii) the substitution for
such Option of options of the successor employer corporation or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and the per share exercise prices.
Upon a business combination by the Corporation or any of its
Subsidiaries with any corporation or other entity through the adoption of a
plan of merger or consolidation or a share exchange or through the purchase of
all or substantially all of the capital stock or assets of such other
corporation or entity, the Board or the Administrator may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on the
effective date of such transaction, hold
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<PAGE> 31
outstanding options to purchase securities of such other corporation or entity
and who, on and after the effective date of such transaction, will become
employees or directors of, or consultants to, the Corporation or its
Subsidiaries. The number of Shares subject to such substitute Options shall be
determined in accordance with the terms of the transaction by which the
business combination is effected. Notwithstanding the other provisions of this
Plan, the other terms of such substitute Options shall be substantially the
same as or economically equivalent to the terms of the options for which such
Options are substituted, all as determined by the Board or by the Committee, as
the case may be. Upon the grant of substitute Options pursuant hereto, the
options to purchase securities of such other corporation or entity for which
such Options are substituted shall be canceled immediately.
15. Issuance of Shares and Compliance with Securities Laws.
Before issuing and delivering any Shares to an Option holder, the Corporation
may: (i) require the holder to give satisfactory assurances that the Shares
are being purchased for investment and not with a view to resale or
distribution, and will not be transferred in violation of applicable federal
and state securities laws, rules and regulations, including but not limited to
the Securities and Exchange Commission Rule 144 and Section 16(b) of the
Securities Exchange Act of 1934, (ii) restrict the transferability of such
Shares and require a legend to be endorsed on the certificates representing the
Shares, as appropriate to reflect resale restrictions, if any, imposed by the
Administrator pursuant to the Option when granted, or as appropriate to comply
with any applicable state or federal securities laws, rules or regulations, and
(iii) condition the exercise of an Option or the issuance and delivery of
Shares upon the listing, quotation, registration or qualification of the Shares
covered by such Option upon a securities exchange, quotation system or under
applicable securities laws.
Any provision hereof which is inconsistent with Rule 16b-3 under the
Securities Exchange Act of 1934, as now or hereafter in effect, shall be
inoperative and shall not affect the validity of the Plan.
16. Income Tax Withholding. If the Corporation or its
Subsidiaries shall be required to withhold any amounts by reason of federal,
state or local tax laws, rules or regulations, in respect of the issuance of
Shares pursuant to the exercise of an Option, the Corporation or such
Subsidiary shall be entitled to deduct and withhold such amounts from any cash
payments to be made to the Option holder. In any event, the holder shall
promptly make available to the Corporation or such Subsidiary, when requested
by the Corporation or such Subsidiary, sufficient funds to meet the
requirements of such withholding, and the Corporation or such Subsidiary shall
be entitled to take and authorize such steps as it may deem advisable in order
to have such funds made available to the Corporation or such Subsidiary from
any funds or property due or to become due to the holder. The obligations of a
holder under this Section 16 shall survive the transfer of an Option pursuant
to Section 9 of this Plan and continue to be enforceable against the Option
transferor.
17. Administration and Amendment of the Plan. Except as
hereinafter provided, the Board of Directors and the Committee may, (a) at any
time, withdraw or, from time to time, amend the Plan as it relates to the terms
and conditions of any Options not theretofore granted, and (b) from time to
time, amend the Plan is it relates to the terms and conditions of any
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<PAGE> 32
outstanding Option to the extent such Option is not then exercisable. The
Board of Directors and the Committee, with the consent of each adversely
affected Option holder may, at any time, withdraw or cancel any outstanding
Option. Notwithstanding the foregoing, any amendment which would increase the
number of Shares issuable under Options or change the class of employees to
whom Options may be granted, must be adopted by the Board of Directors and
approved by the stockholders of the Corporation within one (1) year following
such amendment.
Determinations of the Administrator as to any question which may arise
with respect to the interpretation of the provisions of the Plan and Options
shall be final. The Administrator may authorize and establish such rules,
regulations and revisions thereof, not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Options effective or
provide for their administration and may take such other action with regard to
the Plan and Options as it shall deem desirable to effectuate their purpose.
18. Effective Date of the Plan. This Plan was originally adopted
and approved by the Board of Directors of the Corporation, effective as of the
date of such adoption and approval, conditioned upon its approval by the
stockholders of the Corporation within twelve months following the date the
Plan was adopted by the Board of Directors. Such approval occurred on
September 29, 1995. This Plan was subsequently amended and restated by the
Board of Directors (i) in 1995, effective upon approval of the restatement by
the stockholders of the Corporation which occurred on December 12, 1995, and
(ii) on December 18, 1996, effective as of such date, except with respect to
the amendment to Section 5 increasing the number of Shares available hereunder,
which is conditioned upon the approval by the stockholders of the Corporation
within 12 months after such date.
The Plan shall remain in full force and effect until the close of
business on September 29, 2005 at which time the right to grant Options under
the Plan shall automatically terminate, unless the stockholders of the
Corporation approve an extension or renewal of the Plan. Any Options granted
before the termination of the right to grant Options under the Plan shall
continue to be governed thereafter by the terms of the Plan.
19. Severability. If any provision herein shall be held unlawful
or otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and effect. If the
making of any payment required under the Plan shall be held unlawful or
otherwise invalid or unenforceable, such unlawfulness, invalidity or
unenforceability shall not prevent any other payment from being made under the
Plan, and if the making of any payment in full, as required under the Plan,
would be unlawful or otherwise invalid or unenforceable, then such
unlawfulness, invalidity or unenforceability shall not prevent such payment
from being made in part, to the extent that it would not be unlawful, invalid,
or unenforceable, and the maximum payment that would not be unlawful, invalid
or unenforceable shall be made under the Plan.
20. Governing Law. The Plan and all determinations made and
actions taken hereunder, to the extent not otherwise governed by the Internal
Revenue Code or laws of the United States of America, shall be governed by the
laws of the State of Delaware and construed accordingly.
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<PAGE> 33
1995 EMPLOYEE
STOCK OPTION PLAN OF
EAGLE RIVER INTERACTIVE, INC.
AMENDED AND RESTATED AS OF DECEMBER 18, 1996*
1. Introduction and Purpose. The purpose of this Plan is to
advance the interests of the Corporation by encouraging and enabling the
acquisition of a proprietary interest in the Corporation by Eligible
Participants upon whose judgment and keen interest the Corporation and its
Subsidiaries are largely dependent for the successful conduct of their
operations. It is anticipated that the acquisition of such proprietary
interest in the Corporation will stimulate the efforts of such Eligible
Participants on behalf of the Corporation and its Subsidiaries, and strengthen
their desire to remain with the Corporation and its Subsidiaries. It is also
expected that the opportunity to acquire such a proprietary interest will
foster the efforts of the Corporation and its Subsidiaries to attract desirable
personnel.
2. Definitions. When used in this Plan, unless the context
otherwise requires:
a. "Administrator" means the Board of Directors or the
Committee.
b. "Board of Directors" or "Board" means the Board of
Directors of the Corporation as constituted at any time.
c. "Change in Control" means the earlier of (i) the date
on which any person or entity, or persons or entities acting
in concert, shall acquire the beneficial ownership, as defined
by the Board of Directors in its sole discretion, of Shares or
other securities having more than fifty percent (50%) of the
Voting Power then outstanding, or (ii) the date on which any
person or entity, or persons or entities acting in concert,
shall first disclose an intent to commence an offer to tender
for Shares or other securities having more than fifty percent
(50%) of the Voting Power.
d. "Committee" means the Stock Option Committee, as
described in Section 3 hereof, appointed by the Board to
administer this Plan.
e. "Common Stock" means the common stock of the
Corporation, par value $.001 per share, including both
treasury shares and authorized but unissued
__________________________________
* The amendment which increases the number of Shares available under this
Plan is subject to stockholder approval.
<PAGE> 34
shares, or any security of the Corporation issued in
substitution, exchange or in lieu thereof.
f. "Corporation" means Eagle River Interactive, Inc.
g. "Eligible Participant" means any employee, officer
of, or consultant to, the Corporation or its Subsidiaries
designated to receive Options pursuant to this Plan, as
provided in Section 4.
h. "Fair Market Value" on a specified date means (i) the
closing price at which a Share is quoted on such date if
quoted on the Nasdaq Stock Market or listed on a national
securities exchange on which Shares are primarily traded; or
(ii) if the Shares are not so quoted or listed on such date,
then the average of the bid and asked closing prices at which
one Share is traded on the over-the-counter market, as
reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"); but if no Shares were
traded on such date, then on the last previous date on which a
Share was so traded, or (iii) if none of the above is
applicable, the value of a Share as established by the
Administrator for such date using any reasonable method of
valuation.
i. "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor thereto.
j. "Issue Date" means the date designated by the
Administrator with reference to which the exercisability of an
Eligible Participant's Options may be determined in accordance
with Section 5 hereof. Unless otherwise designated by the
Administrator, the Issue Date of an Option shall be the date
that the Option is awarded to the Eligible Participant by the
Administrator.
k. "Options" means the stock options granted pursuant to
this Plan.
l. "Plan" means this Employee Stock Option Plan, as
amended from time to time.
m. "Plan Year" means the calendar year.
n. "Securities Exchange Act of 1934" means the
Securities Exchange Act of 1934, as amended from time to time,
or any successor thereto.
o. "Share" means a share of Common Stock of the
Corporation, par value $.001.
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<PAGE> 35
p. "Subsidiary" means any "subsidiary corporation", as
such term is defined in Section 424(f) of the Internal Revenue
Code.
q. "Voting Power" means the voting power of any
securities of the Corporation then outstanding which are
generally entitled to vote for the election of directors of
the Corporation.
3. Administration of the Plan. The Plan shall be administered by
the Board of Directors or the Committee. The Committee shall be appointed by
the Board of Directors and shall consist of at least two members of the Board
of Directors. Insofar as it is necessary for compliance with the requirements
of Section 16 of the Securities Exchange Act of 1934, each member of the
Committee must be a "Non-Employee Director" within the meaning of the rules
promulgated pursuant to Section 16 of the Securities Exchange Act of 1934. The
Administrator shall have the authority to administer the Plan as provided
herein and, in exercising this authority, shall establish such rules and
procedures as the Administrator deems necessary or advisable to administer the
Plan.
Each member of the Committee shall hold office until the next regular
annual meeting of the Board of Directors following his or her designation and
until his or her successor is designated as a member of the Committee. Any
vacancy in the Committee may be filled by a resolution adopted by a majority of
the Board of Directors. Any member of the Committee may be removed at any
time, with or without cause, by resolution adopted by a majority of the Board
of Directors. A member of the Committee may resign from the Committee at any
time by giving written notice to the President, Secretary or Assistant
Secretary of the Corporation in person or by certified or registered mail,
return receipt requested, sent to P.O. Box 3600, 1060 West Beaver Creek Blvd.,
Avon, Colorado 81620, and, unless otherwise specified therein, such
resignation shall take effect upon receipt of such written notice. The
acceptance of such resignation by the President, Secretary or Assistant
Secretary of the Corporation shall not be necessary for such resignation to be
made effective.
4. Participants. Except as otherwise provided herein, the class
of individuals who are potential recipients of Options to be granted under this
Plan are the Eligible Participants who, in the sole discretion of the
Administrator, (i) contribute materially to the success of the Corporation or
any of its Subsidiaries, and (ii) are not subject to the reporting requirements
of Section 16 of the Securities Exchange Act of 1934 and the rules promulgated
thereunder on the date that the Option is awarded under this Plan. The
Eligible Participants to whom Options are granted under this Plan and the
number of Shares subject to each such Option shall be determined by the
Administrator in its sole discretion, in accordance with the terms and
conditions of this Plan.
5. Grant and Vesting of Options. The Administrator may, but
shall not be required to, grant in accordance with this Plan Options to
purchase an aggregate of up to 1,500,000 Shares (after giving effect to the
three-for-one stock split effected by the Corporation on March 21,
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<PAGE> 36
1996, hereafter referred to as the "Stock Split," and subject to adjustment for
stock splits, stock dividends and other share adjustments described in Section
14 hereof), which Shares may be either treasury Shares or authorized but
unissued Shares. In no event may an Eligible Participant be granted Options
under the Plan to the extent that the sum of (i) the number of Shares subject
to such Options, and (ii) the number of Shares subject to all other prior
Options granted to such Eligible Participant under the Plan during the
five-year period ending on the date such Options are granted would exceed the
Eligible Participant's Individual Limit. An Eligible Participant's "Individual
Limit" is 60,000 Shares (after giving effect to the Stock Split and subject to
adjustment for stock splits, stock dividends and other share adjustments as
described in Section 14 hereof).
Except as otherwise provided herein, Options granted pursuant to this
Plan shall become exercisable in four (4) equal annual installments on the
first four (4) anniversaries of the Issue Date of such Options; provided,
however, that the Administrator may in its discretion specify, upon the Option
grant and with respect to all or any portion of the Shares subject to such
Options, immediate exercisability or exercisability vesting over a shorter or
longer period in any particular case.
Options granted under this Plan may be either non-qualified stock
options or, with respect to Eligible Participants who are employees of the
Corporation or its Subsidiaries, incentive stock options within the meaning of
Section 422 of the Internal Revenue Code. An Option granted under this Plan
shall be deemed to be a non-qualified stock option unless the Administrator, in
its sole discretion, designates otherwise. Options which are designated or
deemed not to be incentive stock options shall not be treated as such for
purposes of this Plan and the Internal Revenue Code.
Nothing contained herein shall be construed to prohibit the grant of
Options at different times to the same Eligible Participant.
The terms of any Option granted to an Eligible Participant shall,
subject to the other terms and provisions of this Plan, be conclusively
determined by the Administrator, in its sole discretion. The terms and
provisions of the Option shall be set forth in a writing (such writing being
hereinafter referred to as the "Option Certificate") signed on behalf of the
Corporation by the President, any Vice President or the Treasurer of the
Corporation. The Option Certificate shall state whether the Option is an
incentive stock option or a non-qualified stock option. At the time an Option
is granted, the Administrator may, in its sole discretion, establish one or
more conditions to the exercise of such Option, provided that if such Option is
designated as an incentive stock option, then such condition or conditions
shall not be inconsistent with Section 422 of the Internal Revenue Code.
6. Price. Except as otherwise provided herein, the exercise
price per Share of the Shares subject to purchase pursuant to any Option shall
be fixed by the Administrator at the time an Option is granted and may be less
than, equal to, or greater than the Fair Market Value of the
4
<PAGE> 37
Common Stock on the date such Option is granted; provided, however, that if the
Option is an incentive stock option, in no event shall the price be less than
the Fair Market Value of a Share on the day on which the Option is granted (one
hundred ten percent (110%) of the Fair Market Value of a Share if the grantee
is a greater than ten percent (10%) stockholder within the meaning of Section
422(b)(6) of the Internal Revenue Code).
7. Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Administrator, in its sole
discretion, but no more than ten (10) years from the date upon which the Option
is granted (five (5) years if the Option is an incentive stock option and the
grantee is a greater than ten percent (10%) stockholder within the meaning of
Section 422(b)(6) of the Internal Revenue Code).
8. Option Holder Not a Stockholder. An Option holder shall not
be deemed to be the holder of, or to have any rights of a stockholder with
respect to, any Shares subject to such Option, unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Corporation
shall have issued and delivered a certificate representing the Shares to the
Option holder, and (iii) said holder's name shall have been entered as a
stockholder of record on the books of the Corporation. Thereupon, said holder
shall have full voting, dividend and other ownership rights with respect to
such Shares.
9. Non-Transferability of Options. Options and all rights
thereunder shall be non-transferable and non-assignable by the holder thereof,
except to the extent that the representative of the estate or the heirs of a
deceased Option holder may be permitted to exercise such options and rights
thereunder and, during the holders's lifetime, shall be exercisable only by the
holder or his or her legal representative.
10. Exercise of Options. Except as otherwise provided herein, an
Option, after the grant thereof in accordance with the provisions of this Plan,
shall be exercisable by the holder of such Option at such rate and at such time
or times as may be fixed by the Administrator at the time the Option is
granted; provided, however, that no Option may be exercised in part or in full
prior to the approval of the Plan by a majority vote of the stockholders of the
Corporation, as provided in Section 18 hereof.
Notwithstanding any other provisions of this Plan, any Option granted
under the Plan which is an incentive stock option shall not be exercisable to
the extent that the Fair Market Value of the Shares (determined as of the date
of grant), with respect to which such Option (and any other incentive stock
option granted to the holder under this Plan or any other stock option plan
maintained by the Corporation or any Subsidiary) first becomes exercisable in
any calendar year, exceeds $100,000.
All or any part of the unexpired and unexercised Options granted to
any Eligible Participant may be exercised in full, after approval of the Plan
by the stockholders of the Corporation as provided in Section 18 herein,
whether or not such Options were otherwise then
5
<PAGE> 38
exercisable, upon a Change in Control or upon the occurrence of such special
circumstances or event which, in the sole discretion of the Administrator,
merits special consideration.
An Option shall be exercised by the delivery of a written notice duly
signed by the Option holder (or the representative of the estate or the heirs
of a deceased Option holder), together with the Option Certificate and (i)
cash, (ii) a certified check payable to the order of the Corporation, (iii)
subject to the approval of the Administrator, Shares duly endorsed over to the
Corporation (which Shares shall have been owned by the Option holder for at
least six months prior to such exercise and, for purposes of this paragraph, be
valued at their Fair Market Value as of the date preceding the day of such
exercise), (iv) written direction to an authorized broker to sell the Shares
purchased pursuant to such exercise immediately for the account of the Option
holder and pay an appropriate portion of the proceeds thereof to the
Corporation, or (v) any combination of such methods of payment which together
amount to the full exercise price of the Shares purchased pursuant to the
exercise of the Option plus the amount, if any, of any applicable taxes which
the Corporation is required to withhold. Such notice and payment shall be
delivered to the Treasurer or Secretary of the Corporation, or to any other
person designated by the Corporation in a written notice to the Option holder
(the "Authorized Representative").
No Option may be granted or exercised pursuant to the provisions
hereof when such Option, or the granting or exercise thereof, may result in the
violation of any law or governmental order or regulation.
Within a reasonable time after the exercise of an Option, the
Corporation shall cause to be delivered to the person entitled thereto a
certificate for the Shares purchased pursuant to the exercise of the Option.
If the Options shall have been exercised with respect to less than all of the
Shares subject to the Option, the Corporation shall (i) cause to be delivered
to the person entitled thereto a new Option Certificate in replacement of the
Option Certificate surrendered at the time of the exercise of the Option,
indicating the number of Shares with respect to which the Option remains
available of exercise, or (ii) endorse the original Option Certificate to give
effect to the partial exercise thereof.
An Option that is an incentive stock option granted pursuant hereto
shall be exercisable by an Eligible Participant only if such employee has been
in the employ of the Corporation or its Subsidiaries at all times during the
period beginning on the date such Option was granted and ending three (3)
months before the date of such exercise or one year before the date of exercise
in the case of death or disability, as set forth below in Section 13.
11. Disposition of Shares. If the Option is an incentive stock
option, no Shares acquired pursuant to the exercise of an Option granted herein
may be sold, exchange, gifted or otherwise disposed of within two (2) years
following the date such Option was granted or one (1) year following the date
such Option was exercised, whichever is later.
6
<PAGE> 39
12. Fractional Shares. The Corporation shall not be required to
issue fractional Shares pursuant to this Plan and, accordingly, Eligible
Participants may be required to purchase only a whole Share or Shares.
13. Termination of Services. All or any part of any Option, to
the extent unexercised, shall terminate immediately if the Option holder ceases
to be an officer or employee of the Corporation or its Subsidiaries or (if
applicable ) ceases to be a consultant to the Corporation or any of its
subsidiaries; except that the Option holder shall have until the end of three
(3) months (extendible in the discretion of the Administrator for non-qualified
Options to the end of six (6) months), following the date he or she ceases to
be an officer or employee, of, or consultant to, the Corporation or its
Subsidiaries to exercise any exercisable Option rights that he or she could
have exercised on the day on which such employment or service terminated;
provided, however, that such exercise must be accomplished prior to the
expiration of the term of such Option. Notwithstanding the foregoing, if an
individual ceases to be an officer or employee of, or a consultant to, the
Corporation or its Subsidiaries due to (i) retirement on or after attaining the
age of sixty-five (65) years (or such earlier date as such person shall be
permitted under the Corporation's retirement plan), (ii) disability (as such
term is defined in Section 422(c)(6) of the Internal Revenue Code, the
existence of which shall be conclusively determined by the Administrator in its
sole discretion), or (iii) death, then the Option holder, or the representative
of the estate or the heirs of a deceased Option holder, shall have the
privilege of exercising the Options which are then exercisable but are
unexercised at the time of such retirement, disability or death; but only to
the extent that such Options, which are then exercisable, are exercised (i)
within three (3) months following the Option holder's retirement (extendible in
the discretion of the Administrator for non-qualified Options, to six (6)
months), (ii) within one (1) year following the Option holder's disability, or
(iii) within one (1) year following the Option holder's death, as the case may
be; provided, further, that such exercise must be accomplished prior to the
expiration of the term of such Option. If an Option holder ceases to be an
officer or employee of, or a consultant to the Corporation or its Subsidiaries
because of the Option holder's violation of his or her duties to the
Corporation and its Subsidiaries, the existence of such violation to be
conclusively determined by the Administrator in its sole discretion, all
unexercised Options of such Option holder shall immediately terminate and such
Option holder shall have no right to exercise any unexercised Option he or she
might have exercised prior to the date he or she ceased to be an officer or
employee of, or a consultant to, the Corporation or its Subsidiaries.
When a Eligible Participant ceases to be an officer or employee of, or
a consultant to, the Corporation or its Subsidiaries, all Options held by such
Eligible Participant which are not then exercisable shall immediately lapse and
be canceled.
Nothing contained herein or in the Option Certificate shall be
construed to confer on any Eligible Participant any right to continue in the
employ or service of the Corporation or its Subsidiaries or derogate from any
right of the Corporation or its Subsidiaries to request, in its sole
discretion, the retirement, resignation or discharge of such Eligible
Participant, at any time, with or without cause.
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<PAGE> 40
14. Adjustment of Shares. If, prior to the complete exercise of
any Option, there shall be declared and paid a stock dividend upon the Common
Stock of the Corporation or if the Common Stock of the Corporation shall be
split, converted, exchanged, reclassified or in any way substituted, the
Option, to the extent that it has not been exercised, shall entitle the holder
thereof, upon the future exercise of the Option in accordance with this Plan,
to such number and kind of securities, cash or other property, subject to the
terms of the Option, to which he or she would have been entitled had he or she
actually owned the Shares subject to the unexercised portion of the Option at
the time of the occurrence of such stock dividend, split, conversion, exchange,
reclassification or substitution; and the aggregate exercise price upon the
future exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder. If, prior to the complete exercise of
any Option, there shall be a spin-off transaction pursuant to the
reorganization of the Corporation, the Option, to the extent that it has not
been exercised, shall be adjusted by adjusting the exercise price of the Option
and adjusting the number of Shares subject thereto, in order to reflect the
decrease, if any, in the fair market value of the Shares resulting from the
spin-off transaction; in any such case, the Option as adjusted, shall entitle
the holder thereof, upon the future exercise of the Option in accordance with
this Plan, to the number of Shares which have a Fair Market Value, immediately
after the occurrence of the spin-off transaction, equal to the Fair Market
Value of the Shares subject to the Option on the day before the occurrence of
such spin-off transaction, and the aggregate exercise price upon the future
exercise of the Option shall be the same as the aggregate exercise price of the
Shares subject to the Option on the day before the occurrence of such spin-off
transaction. Any fractional shares or other securities payable upon the
exercise of the Option, as a result of such adjustment due to the occurrence of
such stock dividend, stock split, conversion, exchange, reclassification,
substitution or spin-off transaction, shall be payable in cash based upon the
Fair Market Value of such Shares or securities at the time of such exercise.
If any such event should occur, the number of Shares with respect to which
Options remain to be issued or with respect to which Options may be reissued,
and the Individual Limit, shall be adjusted in a similar manner.
Except as otherwise provided in the third paragraph of Section 10
hereof (relating to changes in control among other matters), upon the
dissolution or liquidation of the Corporation, or upon a reorganization, merger
or consolidation in which the Corporation is not the surviving corporation or
entity, or in which the Corporation becomes a subsidiary of another
corporation, or upon the sale of all or substantially all of the property of
the Corporation, both the Plan and the Options issued thereunder shall
terminate, unless a provision is made in connection with such transaction for
(i) the assumption of Options theretofore granted or (ii) the substitution for
such Option of options of the successor employer corporation or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and the per share exercise prices.
Upon a business combination by the Corporation or any of its
Subsidiaries with any corporation or other entity through the adoption of a
plan of merger or consolidation or a share exchange or through the purchase of
all or substantially all of the capital stock or assets of such other
corporation or entity, the Board or the Administrator may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on the
effective date of such transaction, hold
8
<PAGE> 41
outstanding options to purchase securities of such other corporation or entity
and who, on and after the effective date of such transaction, will become
employees or directors of, or consultants to, the Corporation or its
Subsidiaries. The number of Shares subject to such substitute Options shall be
determined in accordance with the terms of the transaction by which the
business combination is effected. Notwithstanding the other provisions of this
Plan, the other terms of such substitute Options shall be substantially the
same as or economically equivalent to the terms of the options for which such
Options are substituted, all as determined by the Board or by the Committee, as
the case may be. Upon the grant of substitute Options pursuant hereto, the
options to purchase securities of such other corporation or entity for which
such Options are substituted shall be canceled immediately.
15. Issuance of Shares and Compliance with Securities Laws.
Before issuing and delivering any Shares to an Option holder, the Corporation
may: (i) require the holder to give satisfactory assurances that the Shares
are being purchased for investment and not with a view to resale or
distribution, and will not be transferred in violation of applicable federal
and state securities laws, rules and regulations, including but not limited to
the Securities and Exchange Commission Rule 144, (ii) restrict the
transferability of such Shares and require a legend to be endorsed on the
certificates representing the Shares, as appropriate to reflect resale
restrictions, if any, imposed by the Administrator pursuant to the Option when
granted, or as appropriate to comply with any applicable state or federal
securities laws, rules or regulations, and (iii) condition the exercise of an
Option or the issuance and delivery of Shares upon the listing, quotation,
registration or qualification of the Shares covered by such Option upon a
securities exchange, quotation system or under applicable securities laws.
Any provision hereof which is inconsistent with Rule 16b-3 under the
Securities Exchange Act of 1934, as now or hereafter in effect, shall be
inoperative and shall not affect the validity of the Plan.
16. Income Tax Withholding. If the Corporation or its
Subsidiaries shall be required to withhold any amounts by reason of federal,
state or local tax laws, rules or regulations, in respect of the issuance of
Shares pursuant to the exercise of an Option, the Corporation or such
Subsidiary shall be entitled to deduct and withhold such amounts from any cash
payments to be made to the Option holder. In any event, the holder shall
promptly make available to the Corporation or such Subsidiary, when requested
by the Corporation or such Subsidiary, sufficient funds to meet the
requirements of such withholding, and the Corporation or such Subsidiary shall
be entitled to take and authorize such terms as it may deem advisable in order
to have such funds made available to the Corporation or such Subsidiary from
any funds or property due or to become due to the holder.
17. Administration and Amendment of the Plan. Except as
hereinafter provided, the Board of Directors and the Committee may, (a) at any
time, withdraw or, from time to time, amend the Plan as it relates to the terms
and conditions of any Options not theretofore granted, and (b) from time to
time, amend the Plan is it relates to the terms and conditions of any
9
<PAGE> 42
outstanding Option to the extent such Option is not then exercisable. The
Board of Directors and the Committee, with the consent of each adversely
affected Option holder may, at any time, withdraw or cancel any outstanding
Option. Notwithstanding the foregoing, any amendment which would increase the
number of Shares issuable under Options or change the class of employees to
whom Options may be granted, must be adopted by the Board of Directors and
approved by the stockholders of the Corporation within one (1) year following
such amendment.
Determinations of the Administrator as to any question which may arise
with respect to the interpretation of the provisions of the Plan and Options
shall be final. The Administrator may authorize and establish such rules,
regulations and revisions thereof, not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Options effective or
provide for their administration and may take such other action with regard to
the Plan and Options as it shall deem desirable to effectuate their purpose.
18. Effective Date of the Plan. This Plan was originally adopted
and approved by the Board of Directors of the Corporation, effective as of the
date of such adoption and approval, conditioned upon its approval by the
stockholders of the Corporation within twelve months following its adoption by
the Board of Directors. Such approval by the Board of Directors and the
stockholders occurred on December 12, 1995. This Plan was subsequently amended
and restated by the Board of Directors on December 18, 1996, effective as of
such date, except with respect to the amendment to Section 5 increasing the
number of Shares available hereunder, which is conditioned upon the approval by
the stockholders of the Corporation within 12 months after such date.
The Plan shall remain in full force and effect until the close of
business on December 12, 2005, at which time the right to grant Options under
the Plan shall automatically terminate, unless the stockholders of the
Corporation approve an extension or renewal of the Plan. Any Options granted
before the termination of the right to grant Options under the Plan shall
continue to be governed thereafter by the terms of the Plan.
19. Severability. If any provision herein shall be held unlawful
or otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and effect. If the
making of any payment required under the Plan shall be held unlawful or
otherwise invalid or unenforceable, such unlawfulness, invalidity or
unenforceability shall not prevent any other payment from being made under the
Plan, and if the making of any payment in full, as required under the Plan,
would be unlawful or otherwise invalid or unenforceable, then such
unlawfulness, invalidity or unenforceability shall not prevent such payment
from being made in part, to the extent that it would not be unlawful, invalid,
or unenforceable, and the maximum payment that would not be unlawful, invalid
or unenforceable shall be made under the Plan.
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<PAGE> 43
20. Governing Law. The Plan and all determinations made and
actions taken hereunder, to the extent not otherwise governed by the Code or
laws of the United States of America, shall be governed by the laws of the
State of Delaware and construed accordingly.
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<PAGE> 44
EAGLE RIVER INTERACTIVE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Terence M. Graunke and Marc Pinto, jointly and individually, as
proxies, each with full power of substitution, and hereby authorizes them to
represent and to vote, as directed below, all shares of Common Stock, par value
$.001 per share, of Eagle River Interactive, Inc., a Delaware corporation (the
"Company"), that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Stockholders of the Company to be held on Thursday, May
29, 1997, or any adjournment thereof.
UNLESS OTHERWISE SPECIFIED ON THIS PROXY, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED "FOR" THE NOMINEES AND PROPOSALS LISTED ON THE REVERSE SIDE AND
DESCRIBED MORE FULLY IN THE PROXY STATEMENT OF THE COMPANY DISTRIBUTED IN
CONNECTION WITH THIS ANNUAL MEETING. If any other business is presented at said
meeting, this Proxy shall be voted in the discretion of the proxies named on
the reverse side.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(To be signed and dated on the reverse side)
1. ELECTION OF DIRECTORS
Nominees: Andrew J. Filipowski and Peter I. Mason
FOR ALL WITHHOLD ALL FOR ALL EXCEPT
----- ----- -----
-------------------------------
(Except nominees written above)
2. PROPOSAL TO AMEND THE 1995 EXECUTIVE STOCK OPTION PLAN TO INCREASE THE NUMBER
OF SHARES RESERVED FOR ISSUANCE THEREUNDER BY 1,500,000 SHARES
FOR AGAINST ABSTAIN
----- ----- -----
3. PROPOSAL TO AMEND THE 1995 EMPLOYEE STOCK OPTION PLAN TO INCREASE THE NUMBER
OF SHARES RESERVED FOR ISSUANCE THEREUNDER BY 900,000 SHARES
FOR AGAINST ABSTAIN
----- ----- -----
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1997
FOR AGAINST ABSTAIN
----- ----- -----
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
Dated: , 1997
--------------- --------------------------------
(Signature)
(Please sign exactly as name appears on stock certificate. Where stock is
registered jointly, all owners must sign. Corporate owners should sign full
corporate name by an authorized person. Executors, administrators, trustees or
guardians should indicate their status when signing.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
