<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x]Preliminary Proxy Statement
[ ]Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SBI COMMUNICATIONS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement if other than the Registrant)
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>
SBI COMMUNICATIONS, INC.
1239 South Glendale Avenue
Glendale, CA 91205
September 1, 2000
To the Shareholders of
SBI COMMUNICATIONS, INC.
The 2000 Annual Meeting of Shareholders of SBI
Communications, Inc., a Delaware corporation (the "Company") will be held
at 10:00 a.m. (PST) on Tuesday, October 10, 2000, at Valencia
Entertainment International, located at 26030 Avenue Hall, Valencia,
California 91355.
Enclosed is the Company's Notice of the Annual Meeting of
Stockholders, Proxy Statement and Proxy Card. The enclosed Proxy
Statement and Proxy Card contain details concerning the business to come
before the meeting.
If you are a record holder of the Company's Common Stock on
August 31, 2000, you are eligible to vote with respect to this matter, either
personally at the meeting or by proxy. It is important that your shares be
voted, whether or not you plan to attend the meeting, to ensure the presence
of a quorum. For that reason we request that you sign and return the Proxy
Card now. If you attend the meeting and wish to vote your shares
personally, you may revoke your proxy.
Recent Developments
Recently, the Company reached an agreement in principal to
acquire Valencia Entertainment International. Valencia is a vertically
integrated entertainment conglomerate that includes television production,
for both network and syndicate, motion pictures, sports, internet and real
estate holdings. The terms of the merger acquisition will make Valencia a
wholly owned subsidiary of the Company and the principals of Valencia will
receive a majority interest in the Company's common stock. Upon
consolidation, the two companies would have revenues in excess of $2
million and a combined total asset base of $20 million.
Valencia Entertainment, which has 12 acres and a 120,000 square feet
production facility in Valencia California, has been the studio set for such
hot series as JAG produced by Paramount Pictures and Power Rangers
produced by Saban Productions. In addition, Valencia's facilities include six
sound stages that have been operating at full capacity since 1995. Recently,
Valencia acquired an additional 52,000 square feet of production facility
which includes two full service sound stages. Valencia's clients include,
Warner Bothers, Universal, MGM, HBO, NBC, 20th Century Fox, Disney,
CBS, Sony, Showtime, and the USA Network.
The merger is subject to the negotiation and execution of a
mutually acceptable merger agreement and the parties satisfaction of its due
diligence, including the receipt of audited financial statements from
Valencia. At this time, the number of shares to be issued to the principals of
Valencia is undeterminable, however, it is expected that it would have a
substantial dilutive effect upon the Company's existing Shareholders. We
believe, however, that the synergy created by the proposed merger with
Valencia, significantly enhances shareholder value and the opportunities that
it would create for the Company.
We look forward to reviewing the activities of the Company with
you at the meeting. We hope you can be with us.
Sincerely,
/s/ Ronald Foster
Ronald Foster
President and Chairman of the Board
<PAGE>
SBI COMMUNICATIONS, INC.
1239 South Glendale Avenue
Glendale, CA 91205
Notice of Annual Meeting of Stockholders
To the Stockholders of SBI Communications, Inc.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of
Shareholders (the "Annual Meeting") of SBI Communications, Inc., a
Delaware corporation (the "Company"), will be held at 10:00 a.m. local
time, on Tuesday, October 10, 2000, at Valencia Entertainment
International, located at 26030 Avenue Hall, Valencia, California 91355, to
consider and to vote on the following matters as more fully described in the
accompanying Proxy Statement:
1. To elect four directors to serve on the Company's Board of Directors for
the ensuing year and until their successors are elected;
2. To amend the Certificate of Incorporation to reflect a change in the
Company's name to ValCom, Inc.;
3. To approve the increase in authorize shares of Common stock available
for issuance under the Company's Certificate of Incorporation;
4. To amend the Certificate of Incorporation to reflect a change in the par
value of the Preferred Stock to $.001;
5. To approve and adopt the Company's 2000 Equity Stock Option Plan;
6. To ratify the selection of Jay J. Shapiro CPA, a Professional Corporation
as independent accountants of the Company for its fiscal year ending
December 31, 2000; and
7. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors have fixed the close of business on August
31, 2000 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting and any adjournments thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. YOUR VOTE IS IMPORTANT. PLEASE FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE RETURN ENVELOPE FURNISHED FOR THAT PURPOSE AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
YOUR PROMPTNESS IN RETURNING THE PROXY WILL ASSIST IN THE EXPEDITIOUS
AND ORDERLY PROCESSING OF THE PROXIES AND WILL ASSIST IN ENSURING THAT A
QUORUM IS PRESENT OR REPRESENTED. IF YOU RETURN YOUR PROXY, YOU MAY
NEVERTHELESS ATTEND THE ANNUAL MEETING AND VOTE YOUR SHARES IN
PERSON IF YOU WISH. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY
REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
By Order of the Board of Directors
Ronald Foster
Chairman and President
Glendale, California
September 5, 2000
<PAGE>
SBI COMMUNICATIONS, INC.
1239 South Glendale Avenue
Glendale, CA 91205
___________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 10, 2000
VOTING AND PROXY
----------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SBI Communications, Inc., (the
"Company") for use at the Annual Meeting of Stockholders to be held at
10:00 a.m., local time, on Tuesday, October 10, 2000, at Valencia
Entertainment International, located at 26030 Avenue Hall, Valencia,
California 91355, (the "Annual Meeting"), and any adjournments thereof.
When such proxy is properly executed, dated and returned, the shares it
represents will be voted in accordance with any directions noted thereon.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspectors of Election, in conjunction with information received from the
Company's transfer agent. The Inspectors of Election will also determine
whether or not a quorum is present. Directors are elected by a plurality of
the votes cast in the election. Pursuant to applicable state law, abstentions
will have the same effect as a negative vote, and will be counted as present
for purposes of determining the existence of a quorum. If no specification is
indicated, the shares will be voted "FOR" the election of the four
director-nominees named on the proxy and for the other proposals. Any
holder of record giving a proxy has the power to revoke it at any time before
it is voted by written notice to the Secretary of the Company, by issuance of
a later dated proxy, or by voting at the meeting in person.
At the close of business on August 31, 2000, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Company had issued and outstanding 12,870,878 shares of its Common
Stock ("Common Stock"). Each share of Common Stock entitles the holder
of record thereof to one vote on any matter coming before the Annual
Meeting. Only stockholders of record at the close of business on August 31,
2000, are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling, and mailing the proxy
solicitation materials. Proxies may be solicited personally, or by mail or by
telephone, by directors, officers and regular employees of the Company who
will not be additionally compensated therefor. It is anticipated that this
Proxy Statement and accompanying Proxy Card will be mailed on or shortly
after September 5, 2000, to all stockholders entitled to vote at the Annual
Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
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Solicitation
------------
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the
proxy and any additional information furnished to shareholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The
Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be
supplemented by telephone, telegram or personal solicitation by directors,
officers or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees
for such services.
Voting Rights and Outstanding Shares
-------------------------------------
Only holders of record of Common Stock at the close of business on August
31, 2000 will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on August 31, 2000 the Company had outstanding and
entitled to vote 12,870,878 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual
Meeting. All votes will be tabulated by the Inspector of Elections appointed
for the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes will be
considered present at the Annual Meeting for the purpose of establishing a
quorum. With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the vote
and will have no effect.
Abstentions may be specified on the proposals to approve and adopt the
2000 Equity Stock Option Plan, the amendment to the Certificate of
Incorporation to reflect a name change to ValCom, Inc., the amendment of
the Certificate of Incorporation to reflect a change in stated par value for the
Preferred Stock to $.001, the amendment of the Certificate of Incorporation
to reflect an increase in authorize common stock to 100,000,000.
Abstentions on these proposals shall have the effect of a affirmative vote.
Brokerage firms who hold shares in "street name" for customers have the
authority to vote those shares with respect to the election of directors and
ratification of the Company's auditors. Brokers will not have authority to
vote shares with respect to the proposals to approve the name change to
ValCom, Inc, approve the increase in authorized shares of Common Stock,
approve to amend the par value of the Preferred Stock to $.001, and adopt
the 2000 Equity Stock Option Plan.
Revocability of Proxies
------------------------
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office at
1239 South Glendale Avenue, Glendale, California 91205, a written notice
of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Attendance at the
meeting will not, by itself, revoke a proxy. If no direction is indicated, the
shares will be voted FOR the election of each of the nominees for director,
FOR the approval of the merger with Valencia Entertainment International,
FOR the approval of the name change to ValCom, Inc, FOR the approval of
the increase in authorized shares of Common Stock, FOR the approve to
amend the par value of the Preferred Stock to $.001, and FOR the approval
and adopt of the 2000 Equity Stock Option Plan. The persons named in the
proxies will have discretionary authority to vote all proxies with respect to
additional matters that are properly presented for action at the Annual
Meeting.
Shareholder Proposals
---------------------
Proposals of shareholders that were intended to be presented at the
Company's 2001 Annual Meeting of Shareholders must be received by the
Company not later than December 15, 2000 in order to be included in the
proxy statement and proxy relating to this Annual Meeting.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company has nominated four (4) individuals for
election as directors to hold office until the next Annual Meeting of
Shareholders and until their successors are elected and qualified. Each of
the following nominees has consented to be nominated to serve as a Director
of the Company.
It is expected that the proxies received by the Directors'
nominees will be voted, except to the extent that authority is withheld on any
proxy as to all or one or more individuals, to elect as Directors the following
nominees, whose principal occupations during the past five (5) years,
directorships and certain other affiliations and information are set forth
below:
Director and/or Executive
Name and Position in the Company Age Officer Since
Ronald Foster 59 1986
CEO, President and
Chairman of the Board
Vince Vellardita 42 --
Nominee
David Weiner 41 --
Nominee
Stephen A. Webber 52 --
Nominee
Ronald Foster, Ron Foster has served as the Company's Chief Executive
Officer, President and Chairman of the Board since 1986. Mr. Foster, 59, is
presently Chairman, President, and Chief Executive Officer for SBI
Communications, Inc. He has been working with the Company since its
inception in 1984. His primary responsibilities include finance, marketing
and technical review. In addition to his responsibilities with the Company,
Mr. Foster has held a number of other management positions over the years.
From 1984 to 1986, he was executive vice president and producer of Pioneer
Games of American Satellite Bingo, in Albany, Georgia. Mr. Foster was
also the owner and operator of Artist Management & Promotions where he
was responsible for coordinating television entertainers, sports figures and
other celebrities for department store promotions. Previously, Mr. Foster
has served as president and director of Ed-Phills, Inc., a Nevada corporation,
and executive vice president and member of the Board of Directors of
Golden American Network, a California corporation. From 1984 to 1994,
he has also been the president and chief executive officer of ROPA
Communications, Inc., which owned and operated WTAU-TV-19 in Albany,
Georgia. He created and produced "Stock Outlook 87, 88, and 89," a video
presentation of public companies through Financial News Network (FNN), a
national cable network. Mr. Foster also has experience as technical director
and associate producer for numerous national live sports broadcasts
produced by ABC, CBS and WTBS. Mr. Foster is Director/Producer/Writer
of the Company Interactive Broadcast Programs. Other than the Company,
Mr. Foster does not currently serve as a director of any other reporting
company.
Vince Vellardita, Vince Vellardita is the Chairman and CEO of
Valencia Entertainment, which is a vertically integrated entertainment
conglomerate which includes television production (both network and
syndication), motion pictures, sports, the Internet and real estate holdings.
Mr. Vellardita was instrumental in having Valencia Entertainment acquire a
170,000 square foot production facility in Valencia, California that houses 8
sound stages that have been occupied for the past four years by the hit CBS
series' JAG and Fox's Power Rangers. Mr. Vellardita began his career in
1977 as a music producer and promoter of live shows and is credited with
bringing Duran Duran and U2 to North America for their first tours. He also
produced a benefit tour for the 1980 Presidential campaign of John
Anderson. Mr. Vellardita does not currently serve as a director of any other
reporting company.
David Weiner, Mr. Weiner received his MBA degree from
U.C.L.A. and gained a wide variety of business experiences early in his
career working in the investment banking and pension fund management
arena. He joined the consulting group of Deloitte and Touche in 1988,
where he provided general and corporate finance consulting services to a
wide variety of entertainment, telecommunications, and direct response
clients including K-tel, International, Inc. Mr. Weiner joined K-tel in 1993,
as Vice President of Corporate Development and was appointed President in
September of 1996. His responsibilities included directing all United States
operations of the company as well as its wholly owned subsidiaries in the
Untied Kingdom, Germany and Finland. Mr. Weiner resigned as President
of K-tel in 1998 to form W-Net, Inc., an Internet and software development
and consulting firm. Mr. Weiner also advises public companies and sits on
various boards of directors.
Stephen A Webber, Mr. Webber is the President and C.F.O. of
Valencia Entertainment LLC. Mr Weber has over 20 years of background in
Finance and Management and is a certified public accountant. Prior to
joining Valencia Entertainment, Mr. Webber was the managing partner for a
regional audit firm. Currently, in addition to his duties at Valencia
Entertainment International, Mr. Webber also consults for a publicly traded
internet company, Genesis Entermedia.com, Inc. where he sits on the Board
of Director and is Chairman of the Audit Committee.
Directors and Executive Officers
--------------------------------
Each director is elected to serve for a term of one (1) year until the next
annual meeting of shareholders or until a successor is duly elected and
qualified. There are no family relationships among directors or persons
nominated or chosen by the Company to become a director. The present
term of office of each director will expire at the next annual meeting of
shareholders.
The executive officers of the Company are elected annually at the first
meeting of the Company's Board of Directors held after each annual meeting
of Shareholders. Each executive officer will hold office until his successor
is duly appointed and qualified, until his resignation or until he shall be
removed in the manner provided by the Company's Bylaws.
During the fiscal year ended December 31, 1999, outside directors received
no cash compensation for their services, however they were reimbursed their
expenses associated with attendance at meetings or otherwise incurred in
connection with the discharge of their duties as directors of the Company.
No officer of the Company receives any additional compensation for his
services as a director, and the Company does not contribute to any
retirement, pension, or profit sharing plans covering its directors.
VOTE REQUIRED; BOARD RECOMMENDATION.
The affirmative vote of a majority of the outstanding shares of stock is
required to elect the above nominees. The Board of Directors unanimously
recommends a vote "FOR" each nominee listed above.
PROPOSAL 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED
COMMON STOCK
The Board has unanimously approved and proposes for Shareholder
approval an amendment to the Company's Certificate of Incorporation to
increase the Company's authorized Common Stock from 40,000,000 to
100,000,000 shares. As of August 31, 2000, 12,870,878 shares of the
Company's Common Stock were issued and outstanding. If the proposed
change in authorized capital is approved by Shareholders, the Company will
have 87,129,122 shares of unissued and unreserved shares of Common
Stock available for issuance in the future.
The Board believes that the additional shares of Common Stock resulting
from the amendment of the Certificate of Incorporation should be available
for issuance from time to time as may be required for various purposes,
including the issuance of Common Stock in connection with financing or
acquisition transactions and the issuance or reservation of Common Stock
for employee stock options. The Company anticipates that in the future it
will consider a number of possible financing and acquisition transactions
that may involve the issuance of additional equity, debt or convertible
securities. If the proposed increase in authorized capital is approved, the
Board would be able to authorize the issuance of shares for these purposes
without the necessity, and related costs and delays, of either calling a special
shareholders' meeting or of waiting for the regularly scheduled annual
meeting of shareholders in order to increase the authorized capital. If in a
particular instance shareholder approval were required by law or any stock
exchanges or markets or otherwise deemed advisable by the Board, then the
matter would be referred to the Shareholders for their approval regardless of
whether a sufficient number of shares previously had been authorized. The
Shareholders of the Company are not entitled to preemptive rights with
respect to the issuance of any authorized but unissued shares.
The proposed change in capital is not intended to have any
anti-takeover effect and is not part of any series of anti-takeover measures
contained in any debt instruments or the Certificate of Incorporation or the
Bylaws of the Company in effect on the date of this Proxy Statement.
However, Shareholders should note that the availability of additional
authorized and unissued shares of Common Stock could make any attempt to
gain control of the Company or the Board more difficult or time consuming
and that the availability of additional authorized and unissued shares might
make it more difficult to remove current management. Although the Board
currently has no intention of doing so, shares of Common Stock could be
issued by the Board to dilute the percentage of Common Stock owned by a
significant shareholder and increase the cost of, or the number of, voting
shares necessary to acquire control of the Board or to meet the voting
requirements imposed by Delaware law with respect to a merger or other
business combination involving the Company. The Company is not aware
of any proposed attempt to take over the Company or of any attempt to
acquire a large block of the Company's Common Stock. The Company has
no present intention to use the increased authorized Common Stock for
anti-takeover purposes.
The text of the FOURTH paragraph of the proposed amendment to the
Company's Certificate of Incorporation, which also includes the proposed
amendment specified in proposal 4 below, is as follows:
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 110,000,000 shares, of which 10,000,000 shares
shall be Preferred Stock of the par value of $.001 each (hereinafter called
"Preferred Stock") and 100,000,000 shares shall be Common stock of the par
value of $.001 each (hereinafter called the "Common Stock").
<PAGE>
VOTE REQUIRED; BOARD RECOMMENDATION.
The affirmative vote of a majority of the outstanding shares of Common
Stock is required to approve the proposed amendment to the Certificate of
Incorporation. The Board of Directors unanimously recommends that the
shareholders vote in favor of the proposal concerning the increase in
authorized common stock.
PROPOSAL 3
APPROVAL OF NAME CHANGE TO VALCOM, INC.
The Board of Directors unanimously approved an amendment to the
Company's Certificate of Incorporation to change the name to ValCom, Inc.
This name change will be implemented by amending the Company's
Certificate of Incorporation. The Board of Directors believes the new name
will be more descriptive of the Company's business after the consummation
of the merger with Valencia Entertainment International.
VOTE REQUIRED; BOARD RECOMMENDATION.
The affirmative vote of a majority of the outstanding shares of Common
Stock is required to approve the proposed amendment to the Certificate of
Incorporation. The Board of Directors unanimously recommends that the
shareholders vote in favor of the proposal concerning the name change to
ValCom, Inc.
PROPOSAL 4
APPROVAL TO AMEND PAR VALUE OF PREFERRED STOCK
The Company's current capital structure provides that for the
authorization of 10,000,000 million shares of Preferred Stock at a par value
of $5.00. Delaware Law computes the annual franchise tax based either
upon the authorized share method or the assumed par value capital method,
but in no event greater than $150,000. In order to reduce and minimize the
annual franchise tax, the Board of Directors unanimously approved an
amendment to the Company's Certificate of Incorporation to change the
Preferred Stock par value from $5.00 per share to $.001. No other rights and
preferences of shareholders of the Preferred Stock shall be effected by this
proposal.
On or about January 31, 1998, the Shareholders approved a plan to
change the Company's corporate domicile to the State of Nevada in order to
reduce the annual franchise tax. This proposal, if adopted, would reduce the
annual franchise tax and the Company would not incur the additional cost of
changing its domicile to Nevada.
The text of the Company's Certificate of Incorporation shall be changed as
provided for under Proposal 2 above to reflect the change in par value of the
Preferred stock.
VOTE REQUIRED; BOARD RECOMMENDATION.
The affirmative vote of a majority of the outstanding shares of stock is
required to approve the proposed amendment to the Certificate of
Incorporation. The Board of Directors unanimously recommends that the
shareholders vote in favor of the proposal to reflect a change in the par value
of the Preferred Stock to $.001.
PROPOSAL 5
ADOPTION OF THE 2000 EQUITY STOCK OPTION PLAN
<PAGE>
Background and Purpose
On August 1, 2000, the Board of Directors unanimously adopted the 2000
Stock Option Plan (the "Plan) which is being presented to the Company's
Shareholders for approval at this Annual Meeting. The purpose of the Plan is
to provide an additional incentive to attract and retain qualified, competent
persons who provide services and upon whose efforts and success the
Company is largely dependent, through the encouragement of ownership of
stock by such persons. In furtherance of this purpose, the Plan authorizes,
among other things, (a) the granting of incentive or nonqualified stock
options to purchase our common stock (collectively, "Options") to persons
selected by the administrators of the Plan from the class of all of the
Company's regular employees, including officers who are regular employees
and directors, (b) the provision of loans for the purposes of financing the
exercise of Options and the amount of taxes payable in connection
therewith, and (c) the use of already owned common stock as payment of the
exercise price for Options granted under the Plan.
Shareholder approval of the Plan is required (i) for purposes of compliance
with certain exclusions from the limitations of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) in order for the Plan to
be eligible under the "plan lender" exemption from the margin requirements
of Regulation U promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (iii) Rule 16b-3 under the Exchange Act
, as amended.
The effective date of the Plan is August 1, 2000 (the "Effective Date"). No
Options have been granted under the Plan as of the date of this Proxy
Statement.
The following is a summary of certain principal features of the Plan. This
summary is qualified in its entirety by reference to the complete text of the
Plan, which is attached to this Proxy Statement as Exhibit A. Stockholders
are urged to read the actual text of the Plan in its entirety.
Administration of the Plan
--------------------------
The Plan provides that it shall be administered by our Board of Directors or
by a committee appointed by the Board of Directors which shall be
composed of two or more directors all of whom shall be "outside directors"
(as defined in the Plan) in compliance with Rule 16b-3 of the Exchange Act
and Section 162(m) of the tax code (although Rule 16b-3 also may be
complied with if the option grants are approved by the Board of Directors).
The committee or the Board of Directors, in its sole discretion, determines
the persons to be awarded the Options, the number of shares subject thereto
and the exercise price and other terms thereof. In addition, the committee or
the Board of Directors has full power and authority to construe and interpret
the Plan, and the acts of the committee or the Board of Directors are final,
conclusive and binding on all interested parties, including upon the
company, shareholders, officers and employees, recipients of grants under
the Plan, and all persons or entities claiming by or through such persons.
An aggregate of 5,000,000 shares of common stock (subject to adjustment
described below) will be reserved for issuance upon the exercise of Options
granted under the Plan. The shares acquired upon exercise of Options
granted under the Plan will be authorized and issued shares of common
stock. The Company's Shareholders will not have any preemptive rights to
purchase or subscribe for any common stock by reason of the reservation
and issuance of common stock under the Plan. If any Option granted under
the Plan should expire or terminate for any reason other than having been
exercised in full, the unpurchased shares subject to that Option will again be
available for purposes of the Plan.
Certain Terms and Conditions
----------------------------
<PAGE>
All Options granted under the Plan must be evidenced by a written
agreement between the Company and the grantee. The agreement will
contain such terms and conditions as the committee or the Board of
Directors shall prescribe, consistent with the Plan, including, without
limitation, the exercise price, term and any restrictions on the exercisability
of the Options granted.
For any Option granted under the Plan, the exercise price per share of
common stock may be any price determined by the committee or the Board
of Directors; however, the exercise price per share of any Incentive Stock
Option may not be less than the Fair Market Value of the common stock on
the date such Incentive Stock Option is granted. For purposes of the Plan,
the "Fair Market Value" on any date of reference is deemed to be the closing
price of common stock on the business day immediately preceding such
date, unless the committee or the Board of Directors in its sole discretion
determines otherwise in a fair and uniform manner. For this purpose, the
closing price of common stock on any business day is (i) if the common
stock is listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of common stock on
such exchange or reporting system, as reported in any newspaper of general
circulation; (ii) if common stock is quoted on the Over the Counter Bulletin
Board ("OTCBB"), or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing
high bid and low asked quotations for such day of common stock on such
system; or (iii) if neither clause (i) nor (ii) is applicable, the mean between
the high bid and low asked quotations for common stock as reported by the
National Quotation Bureau, Incorporated if at least two securities dealers
have inserted both bid and asked quotations for common stock on at least 5
of the 10 preceding days. The closing price per share of the Company's
common stock on August 31, 2000 as reported on the OTCBB was $0.27.
The committee or the Board of Directors may permit the exercise price of an
Option to be paid for in cash, by certified or official bank check or personal
check, by money order, with already owned shares of common stock that
have been held by the Optionee for at least six (6) months (or such other
shares as we determine will not cause us to recognize for financial
accounting purposes a charge for compensation expense), the withholding of
shares of common stock issuable upon exercise of the Option, by delivery of
a properly executed exercise notice together with such documentation as
shall be required by the committee or the Board of Directors (or, if
applicable, the broker) to effect a cashless exercise, or a combination of the
above. If paid in whole or in part with shares of already owned common
stock, the value of the shares surrendered is deemed to be their Fair Market
Value on the date the Option is exercised. The Plan also authorizes the
Company to lend money to an Optionee, guarantee a loan to an Optionee, or
otherwise assist an Optionee to obtain the cash necessary to exercise all or a
portion of the Option granted thereunder or to pay any tax liability of the
Optionee attributable to such exercise. If the exercise price is paid in whole
or part with the Optionee's promissory note, such note shall (i) provide for
full recourse to the maker, (ii) be collateralized by the pledge of the shares
that the Optionee purchases upon exercise of such Option, (iii) bear interest
at the prime rate of our principal lender or such other rate as the committee
or the Board of Directors, as the case may be, shall determine, and (iv)
contain such other terms as the committee or the Board of Directors in its
sole discretion shall reasonably require.
The use of already owned shares of common stock applies to payment for
the exercise of an Option in a single transaction and to the "pyramiding" of
already owned shares in successive, simultaneous Option exercises. In
general, pyramiding permits an Option holder to start with as little as one
share of common stock and exercise an entire Option to the extent then
exercisable (no matter what the number of shares subject thereto). By
utilizing already owned shares of common stock, no cash (except for
fractional share adjustments) is needed to exercise an Option. Consequently,
the Optionee would receive common stock equal in value to the spread
between the fair market value of the shares subject to the Option and the
exercise price of such Option.
No Incentive Stock Option, and unless the prior written consent of the
committee or the Board of Directors is obtained (which consent may be
withheld for any reason) and the transaction does not violate the
requirements of Rule 16b-3 of the Exchange Act, no non-qualified stock
<PAGE>
option granted under the Plan is assignable or transferable, other than by will
or by the laws of descent and distribution. During the lifetime of an
Optionee, an Option is exercisable only by him or her, or in the case of a
non-qualified stock option, by his or her permitted assignee. The expiration
date of an Option under the Plan will be determined by the committee or the
Board of Directors at the time of grant, but in no event may such an Option
be exercisable after 10 years from the date of grant. An Option may be
exercised at any time or from time to time or only after a period of time in
installments, as the committee or the Board of Directors determines. The
committee or the Board of Directors may, in its sole discretion, accelerate
the date on which any Option may be exercised. Each outstanding Option
granted under the Plan may become immediately fully exercisable in the
event of certain transactions, including certain changes in control, certain
mergers and reorganizations, and certain dispositions of substantially all of
the Company's assets.
Unless otherwise provided in the Option agreement, the unexercised portion
of any Option granted under the Plan shall automatically be terminated (a)
three months after the date on which the Optionee's employment is
terminated for any reason other than (i) Cause (as defined in the Plan), (ii)
mental or physical disability, or (iii) death; (b) immediately upon the
termination of the Optionee's employment for Cause; (c) one year after the
date on which the Optionee's employment is terminated by reason of mental
or physical disability; or (d) one year after the date on which the Optionee's
employment is terminated by reason of Optionee's death, or if later, three
months after the date of Optionee's death if death occurs during the one year
period following the termination of the Optionee's employment by reason of
mental or physical disability.
To prevent dilution of the rights of a Optionee, the Plan provides for
appropriate adjustment of the number of shares for which Options may be
granted, the number of shares subject to outstanding Options and the
exercise price of outstanding Options, in the event of any increase or
decrease in the number of issued and outstanding shares of our capital stock
resulting from a stock dividend, a recapitalization or other capital
adjustment. The committee or the Board of Directors has discretion to make
appropriate antidilution adjustments to outstanding Options in the event of a
merger, consolidation or other reorganization of or a sale or other disposition
of substantially all of the Company's assets.
The Plan will expire on July 31, 2010, and any Option outstanding on such
date will remain outstanding until it expires or is exercised. The committee
or the Board of Directors may amend, suspend or terminate the Plan or any
Option at any time, provided that such amendment shall be subject to the
approval of the Company's stockholders if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or to comply with Section 162(m) of the tax code) or
the rules of any stock exchange or automated quotation system on which the
common stock may then be listed or granted. In addition, no amendment,
suspension or termination shall substantially impair the rights or benefits of
any Optionee, pursuant to any Option previously granted, without the
consent of the Optionee.
Federal Income Tax Consequences of Awards of Options.
-----------------------------------------------------
The Plan is not qualified under the provisions of section 401(a) of the tax
code, and is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
On exercise of a nonqualified stock option granted under the Plan, an
Optionee will recognize ordinary income equal to the excess, if any, of the
fair market value on the date of exercise of the shares of common stock
acquired on exercise of the Option over the exercise price. If the Optionee is
a Company employee, that income will be subject to the withholding of
Federal income tax. The Optionee's tax basis in those shares will be equal to
their fair market value on the date of exercise of the Option, and his or her
holding period for those shares will begin on that date.
If an Optionee pays for shares of common stock on exercise of an Option by
delivering shares of the Company's common stock, the Optionee will not
recognize gain or loss on the shares delivered, even if their fair market value
<PAGE>
at the time of exercise differs from the Optionee's tax basis in them. The
Optionee, however,
otherwise will be taxed on the exercise of the Option in the manner
described above as if he or she had paid the exercise price in cash. If a
separate identifiable stock certificate is issued for that number of shares
equal to the number of shares delivered on exercise of the Option, the
Optionee's tax basis in the shares represented by that certificate will be equal
to his tax basis in the shares delivered, and his holding period for those
shares will include his or her holding period for the shares delivered. The
Optionee's tax basis and holding period for the additional shares received on
exercise of the Option will be the same as if the Optionee had exercised the
Option solely in exchange for cash.
The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the Optionee,
provided that amount constitutes an ordinary and necessary business expense
for the Company and is reasonable in amount, and either the employee
includes that amount in income or the Company timely satisfies its reporting
requirements with respect to that amount.
The Plan provides for the grant of stock options that qualify as "incentive
stock options" as defined in section 422 of the tax code. Under the tax code,
an Optionee generally is not subject to tax upon the grant or exercise of an
incentive stock option. In addition, if the Optionee holds a share received on
exercise of an incentive stock option for at least two years from the date the
Option was granted and at least one year from the date the Option was
exercised (the "Required Holding Period"), the difference, if any, between
the amount realized on a sale or other taxable disposition of that share and
the holder's tax basis in that share will be long-term capital gain or loss.
If, however, an Optionee disposes of a share acquired on exercise of an
incentive stock option before the end of the Required Holding Period (a
"Disqualifying Disposition"), the Optionee generally will recognize ordinary
income in the year of the Disqualifying Disposition equal to the excess, if
any, of the fair market value of the share on the date the incentive stock
option was exercised over the exercise price. If, however, the Disqualifying
Disposition is a sale or exchange on which a loss, if realized, would be
recognized for Federal income tax purposes, and if the sales proceeds are
less than the fair market value of the share on the date of exercise of the
Option, the amount of ordinary income recognized by the Optionee will not
exceed the gain, if any, realized on the sale. If the amount realized on a
Disqualifying Disposition exceeds the fair market value of the share on the
date of exercise of the Option, that excess will be short-term or long-term
capital gain, depending on whether the holding period for the share exceeds
one year.
An Optionee who exercises an incentive stock option by delivering shares of
common stock acquired previously pursuant to the exercise of an incentive
stock option before the expiration of the Required Holding Period for those
shares is treated as making a Disqualifying Disposition of those shares. This
rule prevents "pyramiding" the exercise of an incentive stock option (that is,
exercising an incentive stock option for one share and using that share, and
others so acquired, to exercise successive incentive stock options) without
the imposition of current income tax.
For purposes of the alternative minimum tax, the amount by which the fair
market value of a share of common stock acquired on exercise of an
incentive stock option exceeds the exercise price of that Option generally
will be an adjustment included in the Optionee's alternative minimum
taxable income for the year in which the Option is exercised. If, however,
there is a Disqualifying Disposition of the share in the year in which the
Option is exercised, there will be no adjustment with respect to that share. If
there is a Disqualifying Disposition in a later year, no income with respect to
the Disqualifying Disposition is included in the Optionee's alternative
minimum taxable income for that year. In computing alternative minimum
taxable income, the tax basis of a share acquired on exercise of an incentive
stock option is increased by the amount of the adjustment taken into account
with respect to that share for alternative minimum tax purposes in the year
the Option is exercised.
The Company is not allowed an income tax deduction with respect to the
grant or exercise of an incentive stock option or the disposition of a share
<PAGE>
acquired on exercise of an incentive stock option after the Required Holding
Period. However, if there is a Disqualifying Disposition of a share, we are
allowed a deduction in an amount equal to the ordinary income includible in
income by the Optionee, provided that amount constitutes an ordinary and
necessary business expense for us and is reasonable in amount, and either
the employee includes that amount in income or we timely satisfy our
reporting requirements with respect to that amount.
The Omnibus Budget Reconciliation Act added Section 162(m) to the tax
code, which generally disallows a public company's tax deduction for
compensation to covered employees in excess of $1 million in any tax year
beginning on or after January 1, 2004. Compensation that qualifies as
"performance-based compensation" is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the company that
pays it. We intend that Options granted to employees whom the committee
expects to be covered employees at the time a deduction arises in connection
with such Options, will qualify as such "performance-based compensation,"
so that such Options will not be subject to the Section 162(m) deductibility
cap of $1 million. Future changes in Section 162(m) or the regulations
thereunder may adversely affect our ability to ensure that Options under the
Plan will qualify as "performance-based compensation" that is fully
deductible by us under Section 162(m).
The information set forth above is a summary only and does not purport to
be complete. In addition, the information is based upon current Federal
income tax rules and therefore is subject to change when those rules change.
Moreover, because the tax consequences to any Optionee may depend on his
or her particular situation, each Optionee should consult his tax adviser as to
the Federal, state, local and other tax consequences of the grant or exercise
of an Option or the disposition of common stock acquired on exercise of an
Option.
VOTE REQUIRED; BOARD RECOMMENDATION
Section 20 of the Plan, Section 422 of the Code and Rule 16b-3
under the Securities and Exchange Act of 1934, as amended, each require
that a majority of the Company's Shareholder approve and adopt a stock
option plan. The Board of Directors unanimously recommends that the
shareholders vote in favor of the proposal to approve and adopt the
Company's 2000 Equity Stock Option Plan.
PROPOSAL 6
TO RATIFY THE SELECTION OF AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
Jay J. Shapiro, CPA, a professional corporation, served as the
Company's principal accountant for the fiscal year ended December 31,
1999 and is expected to be retained as the Company's principal accountant
for the fiscal year ending December 31, 2000.
VOTE REQUIRED; BOARD RECOMMENDATION.
There is no legal requirement for submitting this proposal to the
Shareholders; however, it is submitted by the Board of Directors in order to
give the Shareholders an opportunity to express their views on the
Company's auditors. Whether the proposal is approved or defeated, the
Board may reconsider its selection of Jay J. Shapiro. If the resolution is not
approved by the Shareholders, the Board of Directors will reconsider its
selection. The Board recommends that the Shareholders vote in favor of
ratifying the selection of Jay J. Shapiro, CPA, a professional corporation, as
the Company's auditors for the fiscal year ending December 31, 2000 or
until the Board of Directors, in its discretion, replaces them. An affirmative
vote of the majority of shares represented at the meeting is necessary to
ratify the selection of auditors. The Company does not anticipate that
members of the accounting firm will be present at the annual meeting to
make a statement or will be available to respond to questions.
2001 Annual Meeting
-------------------
<PAGE>
No definitive date for the Annual Meeting of Shareholders in 2001
has been established. Qualifying Shareholders may submit proposals that
are consistent with the Company's Bylaws and federal securities laws to the
Company for inclusion in the Company's proxy material relating to the 2001
Annual Meeting. The Company must receive such proposals at its business
address (set forth at the beginning of this Proxy Statement) no later than
December 15, 2000.
Other matters
-------------
The Company's Management is not aware of other matters which may come
before the Meeting. The Directors' designees or other persons named in the
accompanying form of proxy will vote said proxy in accordance with their
judgment if any other matter does properly come before the Meeting. A
majority of those votes present at the Meeting cast in favor of any such
matter will result in the passage of such matter.
A copy of Form 10-KSB for the year ending 12/31/99 , the annual
report filed by the Company with the Securities and Exchange Commission,
will be furnished without charge to any person who requests it in writing,
from the office of the Company at its address noted on this Proxy Statement.
Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires any person who owns more than ten percent of any class of any
equity security which is registered pursuant to Section 12 of the Exchange
Act, or who is a director or an officer of the issuer of such security, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC"). Directors, officers, and greater than
ten-percent shareholders are also required by SEC regulation to furnish the
issuer of such securities with copies of all Section 16(a) reports filed.
Specific due dates for these reports have been established and the Company
is required to report in this Proxy Statement any failure to file by these dates
during 1999.
The Company believes that its officers, Directors, and stockholders owning
greater than 10% of the Common Stock of the Company have complied with
the applicable Section 16(a) filing requirements during . In making these
statements, the Company has relied upon the representations of its Directors,
Officers and/or ten percent (10%) shareholder, or copies of the reports that
they have filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 was filed with the Securities and Exchange Commission
on April 5, 2000 which is hereby incorporated by reference.
SBI COMMUNICATIONS, INC.
By:/s/ Ronald Foster
Ronald Foster, President
<PAGE>
SBI COMMUNICATIONS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ronald Foster (SEE NOTE
BELOW), with full power of substitution, the true and lawful attorney and
proxY of the undersigned to attend the Annual Meeting of the Shareholders
of SBI Communications, Inc. (the "Company") to be held at 10:00 a.m.
(PST) on Tuesday, October 10, 2000, at Valencia Entertainment
International, located at 26030 Avenue Hall, Valencia, California 91355, or
any adjournment or adjournments thereof, and vote all the shares of the
Company standing in the name of the undersigned with all the powers the
undersigned would possess if present at said meeting.
1. To elect Directors: Ronald Foster, Vince Vellardita, David Weiner, and
Steve Webb.
FOR each nominee listed above ______ WITHOLD AUTHORITY ____
(except as marked to the contrary below)to vote for all
nominees listed above
(INSTRUCTION: To withhold authority to vote for any individual
nominee, print the name of the nominee on the space provided below)
_____________________________________________________________________________
2. To amend the Certificate of Incorporation to reflect a change in the
Company's name to ValCom, Inc
FOR ____ AGAINST ______ ABSTAIN ____
3. To approve the increase in authorize shares of Common stock available
for issuance under the Company's Certificate of Incorporation;
FOR ____ AGAINST ______ ABSTAIN ____
4. To amend the Certificate of Incorporation to reflect a change in the par
value of the preferred stock to $.001;
FOR ____ AGAINST ______ ABSTAIN ____
5. To approve and adopt the Company's 2000 Equity Stock Option Plan;
FOR ____ AGAINST ______ ABSTAIN ____
6.To ratify the selection of Jay J. Shapiro, CPA, a professional
corporation, as independent accountants of the Company for the fiscal year
ending December 31, 2000.
FOR ____ AGAINST ______ ABSTAIN ____
7. Upon such other matters as may properly come before the meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEM 1 AND IN
THE DISCRETION OF THE PERSON HOLDING THE PROXY FOR ANY OTHER BUSINESS.
(NOTE: Should you desire to appoint a proxy other than the management
designees named above, strike out the names of management designees and
insert the name of your proxy in the space provided above. Should you do
this, give this proxy card to the person you appoint instead of returning the
proxy card to the Company.)
(PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.)
<PAGE>
Receipt is acknowledged of Notice of Annual Meeting and Proxy Statement
for the meeting.
Date___________________________________
_______________________________________
Name (please type or print)
_______________________________________
Signature
_______________________________________
Signature, if held jointly
Please sign exactly as name appears to the left. When shares are held by
joint tenants, both should sign. When signing as executor, administrator,
attorney, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporation name by President or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
<PAGE>
EXHIBIT A
FORM OF THE 2000 EQUITY STOCK OPTION PLAN
SBI COMMUNICATIONS, INC.
2000 Equity Incentive Plan
as Adopted August 1, 2000
1.PURPOSE.
----------
The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of SBI Communications, Inc. (the "Company"), and
its Subsidiaries, by offering them an opportunity to participate in the
Company's future performance through awards of Options, Restricted Stock
and Stock Bonuses. Capitalized terms not defined in the text are defined in
Section 2.
2.DEFINITIONS.
-------------
As used in this Plan, the following terms will have the following meanings:
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means any cause, as defined by applicable law, for the
termination of a Participant's employment with the Company or a Parent or
Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board.
"COMPANY" means SBI Communications, Inc. or any successor
corporation.
"DISABILITY" means a disability, whether temporary or permanent, partial
or total, as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a)if such Common Stock is publicly traded and is then listed on a
<PAGE>
national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is
listed or admitted to trading;
(b)if such Common Stock is quoted on the NASDAQ National Market,
its closing price on the NASDAQ National Market on the date of
determination as reported;
(c)if such Common Stock is publicly traded but is not listed or
admitted to trading on a national securities exchange, the average of the
closing bid and asked prices on the date of determination as reported;
(d)the price per share at which shares of the Company's Common
Stock are initially offered for sale to the public by the Company's
underwriters in the initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the SEC under the Securities
Act if the Award is made on the effective date of such registration statement;
or
(e)if none of the foregoing is applicable, by the Committee in good
faith.
"INSIDER" means an officer or director of the Company or any other person
whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to
Section 6.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this Plan.
"PERFORMANCE FACTORS" means the factors selected by the
Committee, in its sole and absolute discretion, from among the following
measures to determine whether the performance goals applicable to Awards
have been satisfied:
(a)Net revenue and/or net revenue growth;
(b)Earnings before income taxes and amortization and/or
earnings before income taxes and amortization growth;
(c)Operating income and/or operating income growth;
(d)Net income and/or net income growth;
(e)Earnings per share and/or earnings per share growth;
(f)Total stockholder return and/or total stockholder return
growth;
(g)Return on equity;
(h)Operating cash flow return on income;
(i)Adjusted operating cash flow return on income;
(j)Economic value added; and
<PAGE>
(k)Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock
Bonuses.
"PLAN" means this SBI Comminications, Inc. 2000 Equity Incentive Plan,
as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 7.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 3 and 19, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 8.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the
Company. An employee will not be deemed to have ceased to provide
services in the case of (i) sick leave, (ii) military leave, or (iii) any other
leave of absence approved by the Company, provided that such leave is for a
period of not more than 90 days, unless reemployment upon the expiration
of such leave is guaranteed by contract or statute or unless provided
otherwise pursuant to a formal policy adopted from time to time by the
Company and issued and promulgated to employees in writing. In the case
of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Subsidiary as it may deem
appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the Option agreement. The Committee
will have sole discretion to determine whether a Participant has ceased to
provide services and the effective date on which the Participant ceased to
provide services (the "Termination Date").
"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
3.SHARES SUBJECT TO THE PLAN.
--------------------------
3.1Number of Shares Available. Subject to Sections 3.2 and 19, the
total aggregate number of Shares reserved and available for grant and
issuance pursuant to this Plan will be Five Millions (5,000,000) plus Shares
that are subject to: (a) issuance upon exercise of an Option but cease to be
<PAGE>
subject to such Option for any reason other than exercise of such Option; (b)
an Award granted hereunder but forfeited or repurchased by the Company at
the original issue price; and (c) an Award that otherwise terminates without
Shares being issued. At all times the Company shall reserve and keep
available a sufficient number of Shares as shall be required to satisfy the
requirements of all outstanding Options granted under this Plan and all other
outstanding but unvested Awards granted under this Plan.
3.2Adjustment of Shares. In the event that the number of outstanding
shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in
the capital structure of the Company without consideration, then (a) the
number of Shares reserved for issuance under this Plan, (b) the Exercise
Prices of and number of Shares subject to outstanding Options, and (c) the
number of Shares subject to other outstanding Awards will be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities
laws; provided, however, that fractions of a Share will not be issued but will
either be replaced by a cash payment equal to the Fair Market Value of such
fraction of a Share or will be rounded up to the nearest whole Share, as
determined by the Committee.
4.ELIGIBILITY.
-------------
ISOs (as defined in Section 6 below) may be granted only to employees
(including officers and directors who are also employees) of the Company or
of a Parent or Subsidiary of the Company. All other Awards may be granted
to employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent or Subsidiary of the Company,
provided such consultants, contractors and advisors render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Award
under this Plan.
5.ADMINISTRATION.
----------------
5.1Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the
Board, the Committee will have full power to implement and carry out this
Plan. Without limitation, the Committee will have the authority to:
(a)construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b)prescribe, amend and rescind rules and regulations relating to this
Plan or any Award;
(c)select persons to receive Awards;
(d)determine the form and terms of Awards;
(e)determine the number of Shares or other consideration subject to
Awards;
(f)determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to, other Awards
under this Plan or any other incentive or compensation plan of the Company
or any Parent or Subsidiary of the Company;
(g)grant waivers of Plan or Award conditions;
(h)determine the vesting, exercisability and payment of Awards;
<PAGE>
(i)correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j)determine whether an Award has been earned; and
(k)make all other determinations necessary or advisable for the
administration of this Plan.
5.2Committee Discretion. Any determination made by the Committee
with respect to any Award will be made at the time of grant of the Award or,
unless in contravention of any express term of this Plan or Award, at any
later time, and such determination will be final and binding on the Company
and on all persons having an interest in any Award under this Plan. The
Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not
Insiders of the Company.
6.OPTIONS.
---------
The Committee may grant Options to eligible persons and will determine
whether such Options will be Incentive Stock Options within the meaning of
the Code ("ISO") or Nonqualified Stock Options ("NQSOS"), the number of
Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
6.1Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO (hereinafter referred to as the "Stock Option
Agreement"), and will be in such form and contain such provisions (which
need not be the same for each Participant) as the Committee may from time
to time approve, and which will comply with and be subject to the terms and
conditions of this Plan.
6.2Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
6.3Exercise Period. Options may be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no
Option will be exercisable after the expiration of ten (10) years from the date
the Option is granted; and provided further that no ISO granted to a person
who directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary of the Company ("Ten Percent Stockholder") will be
exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in
such number of Shares or percentage of Shares as the Committee
determines.
6.4Exercise Price. The Exercise Price of an Option will be determined
by the Committee when the Option is granted and may be not less than 85%
of the Fair Market Value of the Shares on the date of grant; provided that:
(a) the Exercise Price of an ISO will be not less than 100% of the Fair
Market Value of the Shares on the date of grant; and (b) the Exercise Price
of any ISO granted to a Ten Percent Stockholder will not be less than 110%
of the Fair Market Value of the Shares on the date of grant. Payment for the
Shares purchased may be made in accordance with Section 9 of this Plan.
6.5Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "Exercise
<PAGE>
Agreement") in a form approved by the Committee, (which need not be the
same for each Participant), stating the number of Shares being purchased,
the restrictions imposed on the Shares purchased under such Exercise
Agreement, if any, and such representations and agreements regarding
Participant's investment intent and access to information and other matters, if
any, as may be required or desirable by the Company to comply with
applicable securities laws, together with payment in full of the Exercise
Price for the number of Shares being purchased.
6.6Termination. Notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:
(a)If the Participant's service is Terminated for any reason
except death or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than three (3) months after
the Termination Date (or such shorter or longer time period not exceeding
five (5) years as may be determined by the Committee, with any exercise
beyond three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of the Options.
(b)If the Participant's service is Terminated because of
Participant's death or Disability (or the Participant dies within three (3)
months after a Termination other than for Cause or because of Participant's
Disability), then Participant's Options may be exercised only to the extent
that such Options would have been exercisable by Participant on the
Termination Date and must be exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve (12) months after
the Termination Date (or such shorter or longer time period not exceeding
five (5) years as may be determined by the Committee, with any such
exercise beyond (i) three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's death or Disability,
or (ii) twelve (12) months after the Termination Date when the Termination
is for Participant's death or Disability, deemed to be an NQSO), but in any
event no later than the expiration date of the Options.
(c)Notwithstanding the provisions in paragraph 6.6(a) above, if a
Participant's service is Terminated for Cause, neither the Participant, the
Participant's estate nor such other person who may then hold the Option
shall be entitled to exercise any Option with respect to any Shares
whatsoever, after Termination, whether or not after Termination the
Participant may receive payment from the Company or Subsidiary for
vacation pay, for services rendered prior to Termination, for services
rendered for the day on which Termination occurs, for salary in lieu of
notice, or for any other benefits. For the purpose of this paragraph,
Termination shall be deemed to occur on the date when the Company
dispatches notice or advice to the Participant that his service is Terminated.
6.7Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant
from exercising the Option for the full number of Shares for which it is then
exercisable.
6.8Limitations on ISO. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISO are exercisable
for the first time by a Participant during any calendar year (under this Plan
or under any other incentive stock option plan of the Company, Parent or
Subsidiary of the Company) will not exceed $100,000. If the Fair Market
Value of Shares on the date of grant with respect to which ISO are
exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISO and the Options for
the amount in excess of $100,000 that become exercisable in that calendar
year will be NQSOs. In the event that the Code or the regulations
promulgated thereunder are amended after the Effective Date of this Plan to
provide for a different limit on the Fair Market Value of Shares permitted to
be subject to ISO, such different limit will be automatically incorporated
herein and will apply to any Options granted after the effective date of such
amendment.
6.9Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options
in substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
<PAGE>
any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price
of outstanding Options without the consent of Participants affected by a
written notice to them; provided, however, that the Exercise Price may not
be reduced below the minimum Exercise Price that would be permitted
under Section 6.4 of this Plan for Options granted on the date the action is
taken to reduce the Exercise Price.
6.10No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
7.RESTRICTED STOCK.
------------------
A Restricted Stock Award is an offer by the Company to sell to an eligible
person Shares that are subject to restrictions. The Committee will determine
to whom an offer will be made, the number of Shares the person may
purchase, the price to be paid (the "Purchase Price"), the restrictions to
which the Shares will be subject, and all other terms and conditions of the
Restricted Stock Award, subject to the following:
7.1Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement (the "Restricted Stock Purchase Agreement") that will be in such
form (which need not be the same for each Participant) as the Committee
will from time to time approve, and will comply with and be subject to the
terms and conditions of this Plan. The offer of Restricted Stock will be
accepted by the Participant's execution and delivery of the Restricted Stock
Purchase Agreement and full payment for the Shares to the Company within
thirty (30) days from the date the Restricted Stock Purchase Agreement is
delivered to the person. If such person does not execute and deliver the
Restricted Stock Purchase Agreement along with full payment for the Shares
to the Company within thirty (30) days, then the offer will terminate, unless
otherwise extended by the Committee.
7.2Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted and may not be less than 85% of the Fair
Market Value of the Shares on the grant date, except in the case of a sale to a
Ten Percent Stockholder, in which case the Purchase Price will be 100% of
the Fair Market Value. Payment of the Purchase Price must be made in
accordance with Section 9 of this Plan.
7.3Terms of Restricted Stock Awards. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as
set out in advance in the Participant's individual Restricted Stock Purchase
Agreement. Restricted Stock Awards may vary from Participant to
Participant and between groups of Participants. Prior to the grant of a
Restricted Stock Award, the Committee shall: (a) determine the nature,
length and starting date of any Performance Period for the Restricted Stock
Award; (b) select from among the Performance Factors to be used to
measure performance goals, if any; and (c) determine the number of Shares
that may be awarded to the Participant. Prior to the payment of any
Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may
overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods
and have different performance goals and other criteria.
7.4Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Shares, cash or otherwise)
with respect to the Restricted Stock Award only to the extent earned as of
<PAGE>
the date of Termination in accordance with the Restricted Stock Purchase
Agreement, unless the Committee determines otherwise.
8.STOCK BONUSES.
---------------
8.1Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for extraordinary services rendered
to the Company or any Parent or Subsidiary of the Company. A Stock
Bonus will be awarded pursuant to an Award Agreement (the "Stock Bonus
Agreement") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will
comply with and be subject to the terms and conditions of this Plan. A Stock
Bonus may be awarded upon satisfaction of such performance goals as are
set out in advance in the Participant's individual Award Agreement (the
"Performance Stock Bonus Agreement") that will be in such form (which
need not be the same for each Participant) as the Committee will from time
to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to
Participant and between groups of Participants, and may be based upon the
achievement of the Company, Parent or Subsidiary and/or individual
performance factors or upon such other criteria as the Committee may
determine.
8.2Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant. If the Stock Bonus is
being earned upon the satisfaction of performance goals pursuant to a
Performance Stock Bonus Agreement, then the Committee will: (a)
determine the nature, length and starting date of any Performance Period for
each Stock Bonus; (b) select from among the Performance Factors to be used
to measure the performance, if any; and (c) determine the number of Shares
that may be awarded to the Participant. Prior to the payment of any Stock
Bonus, the Committee shall determine the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses
that are subject to different Performance Periods and different performance
goals and other criteria. The number of Shares may be fixed or may vary in
accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals
applicable to the Stock Bonuses to take into account changes in law and
accounting or tax rules and to make such adjustments as the Committee
deems necessary or appropriate to reflect the impact of extraordinary or
unusual items, events or circumstances to avoid windfalls or hardships.
8.3Form of Payment. The earned portion of a Stock Bonus may be
paid to the Participant by the Company either currently or on a deferred
basis, with such interest or dividend equivalent, if any, as the Committee
may determine. Payment may be made in the form of cash or whole Shares
or a combination thereof, either in a lump sum payment or in installments,
all as the Committee will determine.
9.PAYMENT FOR SHARE PURCHASES.
----------------------------
9.1Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:
(a)by cancellation of indebtedness of the Company
to the Participant;
(b)by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been fully paid with
respect to such shares); or (2) were obtained by Participant in the public
market;
(c)by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate sufficient
<PAGE>
to avoid imputation of income under Sections 483 and 1274 of the Code;
provided, however, that Participants who are not employees or directors of
the Company will not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
(d)by waiver of compensation due or accrued to the
Participant for services rendered;
(e) with respect only to purchases upon
exercise of an Option, and provided that a public market for the Company's
stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
(2) through a "margin" commitment from the Participant
and a NASD Dealer whereby the Participant irrevocably elects to exercise
the Option and to pledge the Shares so purchased to the NASD Dealer in a
margin account as security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or
(f)by any combination of the foregoing.
9.2Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
10.WITHHOLDING TAXES.
--------------------
10.1Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment
will be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.
10.2Stock Withholding. When, under applicable tax laws, a participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of
Shares having a Fair Market Value equal to the minimum amount required
to be withheld, determined on the date that the amount of tax to be withheld
is to be determined. All elections by a Participant to have Shares withheld
for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.
11.PRIVILEGES OF STOCK OWNERSHIP.
---------------------------------
11.1Voting and Dividends. No Participant will have any of the rights of
<PAGE>
a stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will
be a stockholder and will have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares
by virtue of a stock dividend, stock split or any other change in the corporate
or capital structure of the Company will be subject to the same restrictions as
the Restricted Stock; provided, further, that the Participant will have no right
to retain such stock dividends or stock distributions with respect to Shares
that are repurchased at the Participant's Purchase Price or Exercise Price
pursuant to Section 13.
11.2Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will
not be required to provide such financial statements to Participants whose
services in connection with the Company assure them access to equivalent
information.
12.TRANSFERABILITY.
------------------
12.1Non-Transferability of Awards. Awards granted under this Plan,
and any interest therein, will not be transferable or assignable by the
Participant, and may not be made subject to execution, attachment or similar
process, other than by will or by the laws of descent and distribution.
During the lifetime of the Participant an Award will be exercisable only by
the Participant. During the lifetime of the Participant, any elections with
respect to an Award may be made only by the Participant unless otherwise
determined by the Committee and set forth in the Award Agreement with
respect to Awards that are not ISOs.
13.REPURCHASE RIGHTS.
--------------------
At the discretion of the Committee, the Company may reserve to itself
and/or its assignee(s) in the Award Agreement a right to repurchase a portion
of or all Unvested Shares held by a Participant following such Participant's
Termination at any time within ninety (90) days after the Participant's
Termination Date. Such repurchase by the Company shall be for cash and/or
cancellation of purchase money indebtedness, and the price per share shall
be the Fair Market Value of the Shares to be repurchased. This right shall
terminate upon an initial public offering of the Company's securities
pursuant to a registration statement filed with the SEC under the Securities
Act.
14.CERTIFICATES.
----------------
All certificates for Shares or other securities delivered under this Plan will
be subject to such stock transfer orders, legends and other restrictions as the
Committee may deem necessary or advisable, including restrictions under
any applicable federal, state or foreign securities law, or any rules,
regulations and other requirements of the SEC or any stock exchange or
automated quotation system upon which the Shares may be listed or quoted.
15.ESCROW; PLEDGE OF SHARES.
----------------------------
To enforce any restrictions on a Participant's Shares, the Committee may
require the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer approved by the
Committee appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such restrictions have
lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant
<PAGE>
who is permitted to execute a promissory note as partial or full consideration
for the purchase of Shares under this Plan will be required to pledge and
deposit with the Company all or part of the Shares so purchased as collateral
to secure the payment of Participant's obligation to the Company under the
promissory note; provided, however, that the Committee may require or
accept other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company will have full recourse against the
Participant under the promissory note notwithstanding any pledge of the
Participant's Shares or other collateral. In connection with any pledge of the
Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve.
The Shares purchased with the promissory note may be released from the
pledge on a pro rata basis as the promissory note is paid.
16.EXCHANGE AND BUYOUT OF AWARDS.
--------------------------------
The Committee may, at any time or from time to time, authorize the
Company, with the consent of the respective Participants, to issue new
Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
17.SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.
-------------------------------------------------
An Award will not be effective unless such Award is in compliance with all
applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or
automated quotation system upon which the Shares may then be listed or
quoted, as they are in effect on the date of grant of the Award and also on
the date of exercise or other issuance. Notwithstanding any other provision
in this Plan, the Company will have no obligation to issue or deliver
certificates for Shares under this Plan prior to: (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or
advisable; and/or (b) completion of any registration or other qualification of
such Shares under any state or federal law or ruling of any governmental
body that the Company determines to be necessary or advisable. The
Company will be under no obligation to register the Shares with the SEC or
to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated
quotation system, and the Company will have no liability for any inability or
failure to do so.
18.NO OBLIGATION TO EMPLOY.
--------------------------
Nothing in this Plan or any Award granted under this Plan will confer or be
deemed to confer on any Participant any right to continue in the employ of,
or to continue any other relationship with, the Company or any Parent or
Subsidiary of the Company or limit in any way the right of the Company or
any Parent or Subsidiary of the Company to terminate Participant's
employment or other relationship at any time, with or without cause.
19.CORPORATE TRANSACTIONS.
-------------------------
19.1Assumption or Replacement of Awards by Successor. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other
than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other
transaction in which there is no substantial change in the stockholders of the
Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption will be binding on all Participants), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder that
<PAGE>
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest
in the Company, (d) the sale of substantially all of the assets of the
Company, or (e) the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction,
any or all outstanding Awards may be assumed, converted or replaced by the
successor corporation (if any), which assumption, conversion or replacement
will be binding on all Participants. In the alternative, the successor
corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company
held by the Participant, substantially similar shares or other property subject
to repurchase restrictions no less favorable to the Participant. In the event
such successor corporation (if any) refuses to assume or substitute Awards,
as provided above, pursuant to a transaction described in this Subsection
19.1, such Awards will expire on such transaction at such time and on such
conditions as the Committee will determine. Notwithstanding anything in
this Plan to the contrary, the Committee may provide that the vesting of any
or all Awards granted pursuant to this Plan will accelerate upon a transaction
described in this Section 19. If the Committee exercises such discretion with
respect to Options, such Options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the
Committee determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate at such time
as determined by the Committee.
19.2Other Treatment of Awards. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 19, in the event
of the occurrence of any transaction described in Section 19.1, any
outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, or sale of assets.
19.3Assumption of Awards by the Company. The Company, from time
to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other
company or otherwise, by either; (a) granting an Award under this Plan in
substitution of such other company's award; or (b) assuming such award as if
it had been granted under this Plan if the terms of such assumed award could
be applied to an Award granted under this Plan. Such substitution or
assumption will be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under this Plan if
the other company had applied the rules of this Plan to such grant. In the
event the Company assumes an award granted by another company, the
terms and conditions of such award will remain unchanged (except that the
exercise price and the number and nature of Shares issuable upon exercise of
any such option will be adjusted appropriately pursuant to Section 424(a) of
the Code). In the event the Company elects to grant a new Option rather
than assuming an existing option, such new Option may be granted with a
similarly adjusted Exercise Price.
20.ADOPTION AND STOCKHOLDER APPROVAL.
-------------------------------------
This Plan will become effective on the date on which it is adopted by the
Board (the "Effective Date"). This Plan shall be approved by the
stockholders of the Company within twelve (12) months before or after the
date this Plan is adopted by the Board. Upon the Effective Date, the
Committee may grant Awards pursuant to this Plan; provided, however, that:
(a) no Option may be exercised prior to stockholder approval of this Plan;
(b) no Option granted pursuant to an increase in the number of Shares
subject to this Plan approved by the Board will be exercised prior to the time
such increase has been approved by the stockholders of the Company; (c) in
the event that stockholder approval of this Plan is not obtained within the
time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Awards shall be cancelled and
any purchase of Shares issued hereunder shall be rescinded; and (d) in the
event that stockholder approval of an increase in the number of Shares
<PAGE>
subject to this Plan is not obtained, all Awards granted pursuant to such
increase will be cancelled, any Shares issued pursuant to any Award granted
pursuant to such increase will be cancelled, and any purchase of Shares
pursuant to such increase will be rescinded.
21.TERM OF PLAN/GOVERNING LAW.
------------------------------
Unless earlier terminated as provided herein, this Plan will terminate ten (10)
years from the date this Plan is adopted by the Board or, if earlier, the date
of stockholder approval. This Plan and all agreements thereunder shall be
governed by and construed in accordance with the laws of the State of
California.
22.AMENDMENT OR TERMINATION OF PLAN.
------------------------------------
The Board may at any time terminate or amend this Plan in any respect,
including without limitation amendment of any form of Award Agreement
or instrument to be executed pursuant to this Plan; provided, however, that
the Board will not, without the approval of the stockholders of the Company,
amend this Plan in any manner that requires such stockholder approval.
23.NONEXCLUSIVITY OF THE PLAN.
-----------------------------
Neither the adoption of this Plan by the Board, the submission of this Plan to
the stockholders of the Company for approval, nor any provision of this Plan
will be construed as creating any limitations on the power of the Board to
adopt such additional compensation arrangements as it may deem desirable,
including, without limitation, the granting of stock options and bonuses
otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
24.ACTION BY COMMITTEE.
-----------------------
Any action permitted or required to be taken by the Committee or
any decision or determination permitted or required to be made by the
Committee pursuant to this Plan shall be taken or made in the Committee's
sole and absolute discretion.
