<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/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
BRAINTECH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / 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>
BRAINTECH, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 17, 2000
1:00 P.M.
To The Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of BrainTech, Inc., ("BrainTech") will be held on May 17, 2000
at 1:00 p.m. (local time), at the Four Seasons Hotel, 791 West Georgia Street,
Vancouver, British Columbia, Canada for the following purposes:
1. To elect directors.
2. To approve an amendment to BrainTech's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 50,000,000
shares to 200,000,000 shares.
3. To approve the 2000 Stock Option Plan.
4. To ratify the 1997 Stock Option Plan and grants of options under this
plan.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 21, 2000
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
For the Board of Directors
BRAINTECH, INC.
"Grant Sutherland"
GRANT SUTHERLAND
Secretary
Vancouver, British Columbia
February 29, 2000
IMPORTANT
- --------------------------------------------------------------------------------
Whether or not you expect to attend the annual meeting in person, WE URGE YOU TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. THIS WILL
ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. Promptly signing, dating
and returning the proxy will save BrainTech the expense and extra work of
additional solicitation. An addressed envelope, for which no postage is required
if mailed in the United States or Canada, is enclosed for that purpose. Sending
in your proxy will not prevent you from voting your stock at the meeting if you
desire to do so, as your proxy is revocable at your option.
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<PAGE>
BRAINTECH, INC.
------------------------
#102 - 930 WEST 1ST STREET
NORTH VANCOUVER, BRITISH COLUMBIA, CANADA
V7P 3N4
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 2000
This proxy statement, which was mailed to shareholders on ________________,
2000, is furnished in connection with the solicitation of proxies by the
Board of Directors of BrainTech, Inc. ("BrainTech"), to be voted at the
annual meeting of the shareholders of BrainTech (the "Annual Meeting"), which
will be held at 1:00 p.m. (local time) on May 17, 2000 at the Four Seasons
Hotel, 791 West Georgia Street, Vancouver, British Columbia, Canada for the
purposes set forth in the accompanying Notice of Annual Meeting. The
shareholders who execute proxies retain the right to revoke them at any time
prior to the exercise of the powers conferred thereby, by delivering a signed
statement to the Secretary of BrainTech at or prior to the Annual Meeting or
by executing another proxy dated as of a later date. The cost of solicitation
of proxies is to be borne by BrainTech.
Shareholders of record at the close of business on March 21, 2000 will be
entitled to vote at the Annual Meeting on the basis of one vote for each
share held. On March 21, 2000 there were ________ shares of common stock
outstanding, held by ____ shareholders of record.
PROPOSAL ONE - ELECTION OF DIRECTORS
A Board of three (3) Directors is to be elected at the Annual Meeting, to
hold office until the next Annual Meeting of shareholders and until their
successors are elected and qualified. The Board of Directors. has authorized
the nomination at the Annual Meeting of the persons named below as
candidates. Unless otherwise directed, the proxy holders will vote the
proxies received by them for the three nominees named below. In the event
that any of the three nominees is unable or declines to serve as a director
at the time of the Annual Meeting, the proxies will be voted for any nominees
who shall be designated by the present Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline
to serve as a director.
NOMINEES
<TABLE>
<CAPTION>
Name of Nominee Age Positions with BrainTech
- --------------- --- ------------------------
<S> <C> <C>
Owen Jones 48 President and Chief Executive Officer
W. Grant Sutherland 53 Chairman, Secretary, Treasurer, Chief Financial Officer
James L. Speros 41 Vice-President
</TABLE>
<PAGE>
- 2 -
OWEN L.J. JONES has been the President, Chief Executive Officer and a
director of BrainTech since December 1993. Prior to joining the BrainTech
Board of Directors, Mr. Jones was the V.P. Sales, Marketing and Technology of
Evergreen International Technology Inc. (now Sideware Systems Inc.), a
software development company whose shares trade on the Canadian Venture
Exchange and the OTC Bulletin Board. Mr. Jones resigned from his position
with Evergreen International Technology Inc. in December 1993. In May 1995
Mr. Jones was elected as a director of Evergreen International Technology
Inc., and shortly thereafter assumed the responsibilities of President and
Chief Executive Officer of that company. Subsequent to May 1995 Mr. Jones has
divided his time and effort between the affairs of BrainTech and the affairs
of Sideware Systems Inc. Mr. Jones is not a director of any public companies
other than BrainTech and Sideware Systems Inc.
W. GRANT SUTHERLAND was appointed as a director and Chairman of the Board of
Directors of BrainTech in November 1995. Mr. Sutherland is a licensed lawyer
in the Province of British Columbia, and has been engaged in the private
practice of law for 26 years, currently as a partner in the Vancouver law
firm Sutherland Johnston. Mr. Sutherland has also been a director of Sideware
Systems Inc. since May 1993. Since November 1995, Mr. Sutherland has devoted
the majority of his time and effort to the affairs of BrainTech and Sideware
Systems Inc., and presently divides his time between the affairs of BrainTech
and those of Sideware Systems Inc. Mr. Sutherland is not a director of any
public companies other than BrainTech and Sideware Systems Inc.
JAMES L. SPEROS joined the Board of Directors on September 15, 1998. Mr.
Speros is also a director of Sideware Systems Inc., and President and Chief
Operating Officer of Sideware Corp., a wholly owned subsidiary of Sideware
Systems Inc. From June 1993 to January 1997 Mr. Speros was the President and
owner of two professional sports franchises, the Baltimore Stallions and
Montreal Alouettes of the Canadian Football League. From January 1997 to
February 1999 Mr. Speros was the President of Exploration Mirandor, a mining
exploration company. Mr. Speros is also a director of Consolidated Maymac
Petroleum Corp., a public company trading on the Canadian Venture Exchange.
The directors will hold office until they resign, or until their successors
are elected.
INFORMATION REGARDING THE BOARD
The Board of Directors does not have standing audit, nominating, or
compensation committees. During the 1999 fiscal year, the Board of Directors
had six meetings. All of the Directors were in attendance at the meetings
held in 1999.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Under the NEVADA CORPORATION ACT, Directors are elected by a plurality of
votes represented in person or by proxy at the meeting. The Board of
Directors recommends that the shareholders vote for the Board of Directors'
nominees for Directors.
<PAGE>
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EXECUTIVE COMPENSATION
Apart from incentive stock options, disclosed below, BrainTech does not
presently compensate its directors for services provided as directors.
BrainTech provides compensation to its directors, who are also officers, for
services rendered as officers.
BrainTech provides the following compensation to its directors:
OWEN JONES. Effective May 1, 1998 Mr. Jones receives payments totalling
Cdn$10,000 (US$6,800) per month. BrainTech currently pays 20% of those
monthly payments, with Sideware Systems Inc. paying the remaining 80%. Prior
to June 1, 1998, Mr. Jones' monthly payments (then shared equally between
BrainTech and Sideware Systems Inc.) were Cdn$5,000 (US$3,400) per month. Mr.
Jones also holds incentive stock options to acquire 1,527,500 shares at $0.20
per share. Mr. Jones receives no other compensation from BrainTech or any of
its subsidiaries.
GRANT SUTHERLAND. Effective May 1, 1998 Mr. Sutherland receives payments
totalling Cdn$10,000 (US$6,800) per month. BrainTech currently pays 20% of
those monthly payments, with Sideware Systems Inc. paying the remaining 80%.
Mr. Sutherland also holds incentive stock options to acquire 107,500 shares
at $0.20 per share. Mr. Sutherland exercised options to acquire 300,000
shares at $0.20 per share in August 1998 and 1,120,000 shares at $0.20 per
share in January 2000. Mr. Sutherland receives no other compensation from
BrainTech or any of its subsidiaries.
JAMES L. SPEROS. Mr. Speros holds options to acquire 300,000 shares at $0.20
per share, but does not receive any salary from BrainTech. Mr. Speros
receives no other compensation from BrainTech or any of its subsidiaries.
The aggregate amount of cash remuneration which BrainTech paid to its
directors and officers as a group was approximately Cdn$ $48,000 (US$32,640)
during the fiscal ended December 31, 1999.
INCENTIVE STOCK OPTIONS
From time to time, BrainTech grants incentive stock options to directors,
officers, consultants, and employees.
The following table sets forth the incentive stock options held by its
directors and executive officers as at February 29, 2000. All of the options
set out below were granted pursuant to its 1997 Stock Option Plan.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name Options Percent of Number Number Exercise Market Value of Expiry
Granted Total Options Exercised Outstanding Price Underlying Shares Date
Granted(1) at Date of Grant
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Owen Jones 1,500,000 19.4% Nil 1,500,000 $0.20 $0.23 17/12/02
27,500 0.4% Nil 27,500 $0.20 $0.20 19/04/04
- ----------------------------------------------------------------------------------------------------------------
<PAGE>
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- ----------------------------------------------------------------------------------------------------------------
Grant Sutherland 1,500,000 19.4% 1,420,000 80,000 $0.20 $0.23 16/12/02
27,500 0.4% Nil 27,500 $0.20 $0.20 19/04/04
- ----------------------------------------------------------------------------------------------------------------
James Speros 300,000 3.9% Nil 300,000 $0.20 $0.20 19/04/04
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This column states the percentage of all incentive stock options which
BrainTech has granted.
The total number of incentive stock options held by its directors and
officers as at February 29, 2000 is 1,915,000. All of the options stated in
the table above are exercisable within 60 days of February 29, 2000.
Between December 31, 1999 and February 29, 2000, the following incentive
stock options were exercised by directors and officers:
Grant Sutherland 1,120,000 options
All of the options exercised by Mr. Sutherland were granted pursuant to
BrainTech's 1997 Stock Option Plan. In December 1999 BrainTech filed a
registration statement on Form S-8 with the Securities and Exchange
Commission registering stock issued pursuant to the 1997 Stock Option Plan.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of common stock, as of February 29, 2000 by (i) each shareholder
whom BrainTech management knows to be the beneficial owner of more than 5% of
outstanding shares, (ii) each of its Directors and executive officers, and
(iii) all Directors and executive officers as a group:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Owen L.J. Jones*(2) 3,808,500 8.1%
102 - 930 W. 1st North Vancouver, B.C.,
Canada V7P 3N4
James L. Speros*(3) 300,000 0.7%
1111 Grand Hamptons Dr.
Herndon, Virginia
20170
W. Grant Sutherland*(4)
1600 - 777 Dunsmuir St. 2,992,500 6.5%
Vancouver B.C.
V7Y 1K4
Willard W. Olson 2,500,000 5.5%
6021 East Huntress Dr.
<PAGE>
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Paradise, Arizona
85253
All executive officers and directors 7,101,000 14.9%
as a group (3 Persons)(5)
- ---------------------------------------------------------------------------------------------
</TABLE>
* Denotes Director of BrainTech
- ---------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options or warrants currently exercisable or convertible, or exercisable
or convertible within 60 days of February 29, 2000 are deemed outstanding
for computing the percentage of the person holding such option or warrant
but are not deemed outstanding for computing the percentage of any other
person. Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of common stock
beneficially owned.
(2) Includes 1,527,500 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(3) Includes 300,000 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(4) Includes 107,500 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(5) Includes 1,935,000 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
BrainTech is unaware of any person who owns 10% or more of its voting
securities. BrainTech is unaware of any arrangements, the operation of which
may at a subsequent date result in a change of corporate control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Within the last three fiscal years, BrainTech has entered into the
transactions set out below in which its current directors or officers were
interested.
In October 1996 BrainTech entered into an agreement with Sideware Systems
Inc. effective November 1, 1995 pursuant to which certain costs associated
with its premises and operations were shared with Sideware Systems Inc. The
principal costs subject to the cost-sharing agreement included:
- - costs of the North Vancouver premises which BrainTech shares with Sideware
Systems Inc.; and
- - personnel costs including, inter alia, the salary costs of BrainTech's
President and accounting personnel; and
<PAGE>
- 6 -
Prior to October 1999 BrainTech shared the common costs equally with Sideware
Systems Inc. In October 1999, BrainTech agreed with Sideware Systems Inc. to
re-allocate the common costs 20% to BrainTech and 80% to Sideware Systems
Inc. effective from January 1, 1999. The reason for the reallocation of costs
was the substantially greater level of business conducted by Sideware Systems
Inc., and its corresponding greater use of the common premises and personnel.
Sideware Systems Inc. is a software development company whose shares trade on
the Canadian Venture Exchange and the OTC Bulletin Board. The directors of
Sideware Systems Inc. include Owen Jones, Grant Sutherland and James Speros.
Shared costs under the Cost Sharing and Allocation Agreement are administered
by Techwest Management Inc., a private management company. In addition,
services of certain personnel are provided to BrainTech through Techwest
Management Inc. Techwest Management Inc. is a private management company in
which Owen Jones and Grant Sutherland each hold a one third interest. The
personnel whose services are provided through Techwest Management Inc.
include, inter alia, Owen Jones and BrainTech's accounting personnel.
Techwest Management Inc. passes shared costs (including personnel costs)
through to BrainTech and Sideware Systems Inc. at cost, without any markup.
From time to time, the payments of either BrainTech or Sideware Systems Inc.
have exceeded the proportionate share required under the cost sharing
arrangement, giving rise to indebtedness as between BrainTech, Sideware
Systems Inc. and Techwest Management Inc. Through much of 1998 and 1999,
BrainTech was indebted to Sideware Systems Inc., as BrainTech did not have
sufficient cash available to pay its proportionate share of the common
operating costs. As at February 29, 2000 BrainTech has paid off this
intercorporate indebtedness.
Effective July 1, 1999 BrainTech has also entered into the following
agreements relating to additional leasehold premises:
(a) a lease covering the premises at Suite 1620, 777 Dunsmuir Street (the
"Original Premises") for the period July 1, 1999 to June 30, 2002, and
covering the premises at Suite 1600, 777 Dunsmuir Street (the "Extended
Premises") for the period December 1, 2000 to June 30, 2002; and
(b) an Assignment of Lease covering the Extended Premises for the period
July 1, 1999 to November 30, 2000.
The total space included in the Original and Extended Premises is 8,325
square feet. The landlord of the Original and Extended Premises is Pacific
Center Leaseholds Limited, an arm's length company.
The tenant under the lease described in (a) is Techwest Management Inc.
BrainTech is an indemnifier under the lease, along with Sideware Systems Inc.
As an indemnifier,
<PAGE>
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BrainTech is liable to perform all of the obligations of the tenant under the
lease, including the payment of rent.
The assignor under the assignment described in (b) is SJM Management Ltd., a
private management company which holds a lease in respect of the Extended
Premises covering the period July 1, 1999 to November 30, 2000. Grant
Sutherland holds a one third beneficial interest in SJM Management Ltd. Prior
to July 1, 1999 the Extended Premises were occupied by the law firm
Sutherland Johnston MacLean, in which Mr. Sutherland was a partner. Under the
assignment, SJM Management Ltd. assigned its interest in respect of the
Extended Premises to Techwest Management Inc., which agreed to perform all of
the obligations of the tenant under the lease. BrainTech is an indemnifier
under the assignment, along with Sideware Systems Inc. As an indemnifier,
BrainTech is liable to perform all of the obligations of the assignee,
including the payment of rent.
BrainTech expects that for the foreseeable future, it will:
(a) bear approximately 10% of the cost of the Extended Premises; and
(b) not use, and thus not bear any of the cost of, the Original Premises.
During the year ended December 31, 1998 BrainTech purchased approximately
$26,000 worth of computer equipment from Sideware Systems Inc. During the
year ended December 31, 1999 BrainTech's purchases of computer equipment from
Sideware Systems Inc. were approximately $30,000. BrainTech purchases most of
its computer equipment through Sideware Systems Inc. owing to favorable
pricing on IBM equipment available to Sideware Systems Inc. Sideware Systems
Inc. charged a markup on the initial purchases, but its current policy is to
pass such equipment on to BrainTech at cost.
BrainTech entered into a Software Development and License Agreement dated
September 20, 1999 with Sideware Systems Inc. Pursuant to the Software
Development and License Agreement, BrainTech developed a program named the
"Wizmaster", for incorporation into Sideware's "Dr. Bean" program. Dr. Bean
is an electronic Customer Relations Management ("eCRM") program which
supports live chat over the internet between companies and their customers.
One of the features of Dr. Bean, known as "AutoService", displays automated
questions for customer response, and then processes the customer's inquiry
according to the response he selects. Wizmaster permits Dr. Bean users to
customize the questions and answers used in the AutoService feature through a
user friendly drop-and-drag procedure.
Under the Software Development and License Agreement, Sideware Systems Inc.
agreed to pay the cost of developing Wizmaster on a cost plus 10% basis.
Sideware Systems Inc. acquired, at no further charge, a perpetual worldwide
license to use Wizmaster as part of Dr. Bean. BrainTech is prohibited from
licensing Wizmaster to any other software developer (but not to systems
integrators) for a period of one year starting from the date Wizmaster
becomes generally available to purchasers of Dr. Bean.
Effective October 31, 1998 Sideware Systems Inc. purchased an interest in the
proceeds of a judgment which BrainTech obtained on April 2, 1998 against John
Kosituk, in the
<PAGE>
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amount of $300,000, in British Columbia Supreme Court Action No. C972736.
Sideware Systems Inc. paid $136,000 on account of the purchase price, which
was subject to adjustment depending on the benefit ultimately received by
Sideware Systems Inc. pursuant to the judgment. On March 18, 1999 the British
Columbia Court of Appeal allowed an appeal from the judgment. As a result,
BrainTech repaid the $136,000.
In November 1995 BrainTech entered into a License Agreement with NetMedia
Systems Inc., a private company in which Owen Jones and Grant Sutherland hold
interests, and a Joint Venture Agreement with NetMedia Systems Inc. and
Sideware Systems Inc. None of the business contemplated by the agreements
proceeded, with the result that the agreements were terminated in October
1999.
BrainTech has acquired legal services from the law firm Sutherland Johnston,
of which Grant Sutherland is a partner. During 1999, Sutherland Johnston (and
a predecessor firm) rendered accounts for legal services totalling $33,000
(exclusive of taxes and disbursements).
During BrainTech's last three fiscal years and the nine month period ended
September 30, 1999 Grant Sutherland has acquired the following shares in
private placements:
- 780,000 shares at a price of $0.25 per share pursuant to a private
placement conducted in May 1998;
- 300,000 shares at a price of $0.20 per share pursuant to a private
placement conducted in September 1998;
- 1,000,000 shares at a price of $0.15 per share pursuant to a private
placement conducted in March 1999;
- 1,000,000 shares at a price of $0.15 per share pursuant to a private
placement conducted in September 1999;
- 135,000 shares at a price of $0.15 per share pursuant to a private
placement conducted in October 1999; and
- 150,000 shares at a price of $0.60 per share pursuant to a private
placement conducted in December 1999.
During BrainTech's last three fiscal years and the nine month period ended
September 30, 1999 Owen Jones has acquired the following shares in private
placements:
- 1,000,000 shares at a price of $0.15 per share pursuant to a private
placement conducted in March 1999.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the EXCHANGE ACT requires BrainTech's Directors, executive
officers and persons who own more than 10% of its common stock (collectively
"Reporting Persons") to file reports of ownership and changes in ownership of
its common stock. SEC regulations require Reporting Persons to give BrainTech
copies of all section 16(a) reports they file. Based solely on BrainTech's
review of copies of those reports or written representations from Reporting
Persons, BrainTech believes that during the last fiscal year ended December
31, 1999, all Reporting Persons complied with all applicable filing
requirements except as follows:
<PAGE>
- 9 -
(1) Grant Sutherland filed a Form 4 relating to transactions in December
1999 on February 24, 2000, which was 45 days late. The Form 4 reported
16 transactions.
(2) Grant Sutherland filed a Form 5 relating to transactions during 1999 on
February 24, 2000, which was 10 days late. The Form 5 reported 6
transactions.
PROPOSAL TWO - AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED
SHARES OF COMMON STOCK
GENERAL
The Board of Directors has approved, and is recommending to the shareholders,
an amendment to Article IV of BrainTech's Articles of Incorporation to
increase the number of shares BrainTech is authorized to issue. Currently,
BrainTech's Articles of Incorporation authorize BrainTech to issue 50,000,000
shares of common stock with a par value of $.001 per share. The proposed
amendment would increase Braintech's authorized capital to 200,000,000 shares
of common stock with a par value of $.001 per share. The Board of Directors
has determined this amendment is advisable. The full text of the proposed
amendment to the Articles of Incorporation is set forth below:
"The Corporation shall have the authority to issue Two
Hundred Million (200,000,000) shares of common stock with
a par value of $.001 per share, all stock of the
corporation shall be of the same class common and shall
have the same rights and preferences, fully paid stock of
this corporation shall not be liable to any further call
or assessment."
DESCRIPTION OF BRAINTECH'S COMMON STOCK
As of February 29, 2000, BrainTech had 45,719,333 shares of common stock
outstanding.
The additional shares of common stock for which authorization is sought would
be part of the existing class of common stock and, if and when issued, would
have the same rights and privileges as the shares of common stock presently
outstanding. Such additional shares would not (and the shares of common stock
presently outstanding do not) entitle the holders thereof to pre-emptive or
cumulative voting rights.
PURPOSES AND EFFECTS OF PROPOSED INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
The Board of Directors believes it is desirable to increase the number of
shares of common stock that BrainTech is authorized to issue. The increase is
necessary to permit BrainTech to raise additional equity financing in the
future. In addition, the increase will permit BrainTech to reserve a
sufficient number of shares to satisfy the requirements of the 2000 Stock
Option Plan being proposed for approval by the shareholders at the Annual
Meeting.
<PAGE>
- 10 -
Unless required by law or the rules of any stock exchange on which
BrainTech's common stock may in the future be listed, no further
authorization or vote of the shareholders will be sought for any issuance of
shares of common stock. The holders of common stock are not entitled to
pre-emptive rights or cumulative voting. Accordingly, the issuance of
additional shares might dilute the ownership and voting rights of existing
shareholders. The proposed increase in the number of authorized shares is not
intended to inhibit a change in corporate control. The availability for
issuance of additional shares of common stock could discourage, or make more
difficult, efforts to obtain control of BrainTech. For example, the issuance
of shares of common stock in a public or private sale, merger, or similar
transaction, would increase the number of outstanding shares, thereby
possibly diluting the interest of a party attempting to obtain control of
BrainTech. BrainTech is not aware of any pending or threatened efforts to
acquire control of BrainTech.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
The affirmative vote of the holders of the majority of the shares of
BrainTech's common stock present or represented by proxy at the Annual
Meeting will be required to approve amendment of BrainTech's Articles of
Incorporation to increase the authorized shares of common stock to
200,000,000. The Board of Directors unanimously recommends that the
shareholders vote in favour of amending BrainTech's Articles of Incorporation
as proposed.
PROPOSAL THREE - APPROVAL OF 2000 STOCK OPTION PLAN
The Board of Directors has approved and is recommending to the shareholders
for approval at the Annual Meeting the 2000 Stock Option Plan. The purpose of
the 2000 Stock Option Plan is to allow BrainTech to continue to attract and
retain competent directors, officers, employees and consultants and to
provide incentive to such persons to use their best efforts on its behalf. A
copy of the 2000 Stock Option Plan may be obtained upon written request to
BrainTech's Investor Relations Department at the address listed on page 15.
THE ESSENTIAL FEATURES OF THE 2000 STOCK OPTION PLAN ARE OUTLINED BELOW
GENERAL
BrainTech's directors, officers, employees, and consultants will be eligible
for selection to participate in the Plan. The Board of Directors will
determine from the eligible class of individuals who will receive options and
terms and provisions of the options (which need not be identical).
STOCK SUBJECT TO THE PLAN
The stock to be offered under the 2000 Stock Option Plan shall be shares of
BrainTech's authorized but unissued common stock including re-acquired common
stock or common stock previously issued but cancelled. The aggregate amount
of stock to be delivered
<PAGE>
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upon the exercise of all options granted under the 2000 Stock Option Plan
shall not exceed 7.5 million shares, provided that at no time may the
aggregate amount of stock to be delivered upon the exercise of all options
granted under the 1997 Stock Option Plan (7,500,000 shares) and the 2000
Stock Option Plan exceed 30% of BrainTech's issued and outstanding common
stock.
As of February 29, 2000, there were 45,719,333 shares of common stock
outstanding. The closing price of BrainTech's common stock on February 28,
2000 was $2,375.
TERMS OF THE OPTIONS GRANTED
The purchase price of stock covered by each option shall be determined by the
Board of Directors. Each option and all rights and obligations thereunder
shall expire on such date as the Board of Directors shall determine, but no
later than the 5th anniversary of the date on which the option is granted
subject to earlier termination as provided in the Plan. The Board of
Directors may make any adjustment to the terms of any option, including
changes to the exercise price, the number of shares optioned, and the term of
the option. If any option holder dies while employed by BrainTech, such
holders' options shall remain exercisable until the earlier of the original
expiry date and two years after the date of death. If any option holder
ceases to be employed by BrainTech because of discharge for cause, such
option holders' options shall expire on the date of termination. If an option
holder resigns or ceases to be employed by BrainTech for any reason other
that death or discharge for cause, such option holders' options shall expire
on the earlier of the original expiry date and 30 days after the date of
ceasing to be employed by BrainTech (or such greater period of time as the
Board of Directors may determine or as may be agreed with the employee by way
of separate agreement). An option granted under the Plan shall be
non-transferable by the option holder except in the case of transfer by way
of gift or by the laws of descent and distribution.
AMENDMENT AND TERMINATION
The Board may at any time suspend, amend or terminate the 2000 Stock Option
Plan. No options may be granted during any suspension of the plan or after
the date of termination. The amendment, suspension or termination of the plan
shall not, without the consent of the option holders, alter or impair any
rights or obligations under any option previously granted under the plan.
No options may be granted under the 2000 Stock Option Plan after February 11,
2009.
TAX CONSEQUENCES
Options granted under the 2000 Stock Option Plan are non-qualified stock
options. Non-qualified stock options granted under the plan do not qualify as
incentive stock options and will not qualify for any special tax benefits to
the option holder. An option holder generally will not recognize any taxable
income at the time he or she is granted a non-qualified option. However, upon
its exercise, the option holder will recognize ordinary income for federal
tax purposes measured by the excess of then fair market value of the
<PAGE>
- 12 -
shares over the exercise price. The income realized by the option holder who
will be subject to income and other employee withholding taxes.
The option holders' basis for determining gain or loss upon the subsequent
disposition of shares acquired upon the exercise of the non-qualified stock
option will be the amount paid for such shares plus any ordinary income
recognized as a result of the exercise of such option. Upon disposition of
any shares acquired pursuant to the exercise of a non-qualified stock option,
the difference between the sale price and the option holders' basis in the
shares will be treated as a capital gain or loss and generally will be
characterized as long-term capital gain or loss if the shares have been held
for more than one year at their disposition.
In general, BrainTech will not be entitled to any federal income tax
deduction upon grant or termination of a non-qualified stock option or sale
or disposition of the shares acquired upon the exercise of the non-qualified
stock option. However, upon exercise of a non-qualified stock option,
BrainTech will be entitled to a deduction for federal income tax purposes
equal to the amount of ordinary income that an option holder is required to
recognize as a result of the exercise, provided that the deduction is not
otherwise disallowed under the Internal Revenue Code.
The federal income tax consequences of participation in the 2000 Stock Option
Plan are complex and subject to change. The above discussion is only a
summary of the general rules applicable to the 2000 Stock Option Plan.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Approval of the 2000 Stock Option Plan requires more votes in favour of
adoption of the plan than those against adoption. The Board of Directors
unanimously recommends a vote for adoption of the 2000 Stock Option Plan. If
the amendment to the Articles of Incorporation to increase the authorized
number of shares of common stock to 200,000,000 is not approved by the
shareholders at the Annual Meeting, there may be insufficient shares of
common stock available for the purposes of the 2000 Stock Option Plan and the
Board of Directors may not fully utilize the 2000 Stock Option Plan.
PROPOSAL FOUR - RATIFICATION OF THE 1997 STOCK OPTION PLAN
The Board of Directors recommends shareholder ratification of the 1997 Stock
Option Plan and grants of stock options made under the Plan. The 1997 Stock
Option Plan was limited to issuance of options for 7,500,000 shares, and
BrainTech has entered into option agreements for the maximum amount of shares
permitted under the Plan. The purpose of the Plan was to allow BrainTech to
attract and retain competent directors, officers, employees, and consultants
and provide an incentive to such persons to use their best efforts on its
behalf. A copy of the 1997 Stock Option Plan may be obtained upon written
request to BrainTech's Investor Relations Department at the address listed on
page 15.
<PAGE>
- 13 -
All material terms of the 1997 Stock Option Plan are the same as the 2000
Stock Option Plan. See the description of the 2000 Stock Option Plan under
Proposal Three.
The following table sets forth the options granted under the 1997 Stock
Option Plan to: (1) BrainTech's Chief Executive Officer and two other
Executive Officers; (2) all current executive officers as a group; (3) each
person who received 5% of such options (other than the current executive
officers); and (4) all employees, including all current officers who are not
executive officers, as a group.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Percent Market Value
of Total of Underlying
Options Options Number Number Exercise Shares at Expiry Date
Name Granted Granted(1) Exercised Outstanding Price Date of Grant (dd/mm/yy)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Owen Jones, Chief 1,500,000 19.4% Nil 1,500,000 $0.20 $0.23 16/12/02
Executive Officer 27,500 0.4% Nil 27,500 $0.20 $0.20 19/04/04
- ------------------------------------------------------------------------------------------------------------------
Grant Sutherland, 1,500,000 19.4% 1,420,000 80,000 $0.20 $0.23 16/12/02
Secretary and 27,500 0.4% Nil 27,500 $0.20 $0.20 19/04/04
Treasurer
- ------------------------------------------------------------------------------------------------------------------
James Speros, 300,000 3.9% Nil 300,000 $0.20 $0.20 19/04/04
Vice-President
- ------------------------------------------------------------------------------------------------------------------
ALL EXECUTIVE OFFICERS 1,580,000 $0.20 $0.23 16/12/02
AND DIRECTORS AS A 3,355,000 44.7% 1,420,000 55,000 $0.20 $0.20 19/04/04
GROUP; 3 PERSONS
- ------------------------------------------------------------------------------------------------------------------
EACH PERSON WHO
RECEIVES 5% OF SUCH
OPTIONS OTHER THAN
EXECUTIVE OFFICERS
- ------------------------------------------------------------------------------------------------------------------
John McDonald 1,500,000 19.4% 1,500,000 Nil $0.20 $0.23 16/12/02
100,000 1.3% 100,000 Nil $0.20 $0.79 13/05/03
- ------------------------------------------------------------------------------------------------------------------
Peter MacLean 100,000 1.3% 100,000 Nil $0.20 $0.23 01/12/02
400,000 5.3% 400,000 Nil $0.20 $0.79 05/15/03
- ------------------------------------------------------------------------------------------------------------------
ALL EMPLOYEES AND 400,000 5.3% 297,000 3,000 $0.20 $0.23 01/12/02
OFFICERS AS A GROUP 870,000 11.6% 624,000 131,000 $0.20 $0.79 05/15/03
EXCLUDING EXECUTIVE 300,000 4% 175,000 125,000 $0.20 $0.19 19/04/04
OFFICERS 100,000 1.3% 100,000 100,000 $0.20 $0.21 25/11/04
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Ratification of the 1997 Stock Option Plan and the grants of options under
the 1997 Stock Option Plan requires more votes in favour of ratification than
those against. The Board of Directors unanimously recommends that
shareholders vote to ratify the 1997 Stock Option Plan and the grants of
options under the 1997 Stock Option Plan.
PROPOSALS OF SHAREHOLDERS
BrainTech must receive proposals of shareholders intended to be presented at
the 2001 annual meeting of shareholders no later than December 2, 2000 in
order that they be included in the Proxy Statement and form of proxy for that
meeting. BrainTech reserves
<PAGE>
- 14 -
the right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors. Proxies may be solicited by BrainTech's officers, directors, and
regular supervisory and executive employees, none of whom will receive any
additional compensation for those services. Solicitations may be made
personally, or by mail, facsimile, telephone, telegraph, messenger, or via
the Internet. BrainTech will pay persons holding shares of common stock in
their names or in the names of nominees, but not owning such shares
beneficially, such as brokerage houses, banks, and other fiduciaries, for the
expense of forwarding solicitation materials to their principals. BrainTech
will pay the cost of proxy solicitation.
VOTING TABULATION
Votes cast by proxy or in person at the meeting will be tabulated by
representatives of Montreal Trust Company of Canada. A majority of the voting
shares, which includes the voting shares present at the meeting in person or
by proxy, regardless of whether the proxy has authority to vote on all
matters, constitutes a quorum for the transaction of business at the Annual
Meeting.
EFFECT OF AN ABSTENTION AND BROKER NON-VOTES: A shareholder who abstains
from voting on any or all proposals will be included in the number of
shareholders present at the meeting for the purpose of determining the
presence of a quorum. Abstentions will not be counted either in favour of or
against the election of the nominees or other proposals. If a broker returns
a "non-vote" proxy, indicating a lack of authority to vote on a proposal,
then the shares covered by such "non-vote" shall be deemed present at the
meeting for purposes of determining a quorum, but not for the purposes of
calculating the vote with respect to the proposal on which the broker had no
authority to vote.
AUDITORS
KPMG LLP are the independent public auditors for BrainTech for the fiscal
year ending December 31, 1999 and the current fiscal year. Representatives of
KPMG LLP will not be present at the Annual Meeting.
OTHER MATTERS
The Board of Directors does not intend to bring any other business before the
meeting, and so far as is known to the Board, no matters are to be brought
before the meeting except as specified in the notice of the meeting. However,
as to any other business that may properly come before the meeting, it is
intended that proxies, in the form enclosed, will be voted in respect thereof
in accordance with the judgement of the persons voting such proxies.
<PAGE>
- 15 -
The following documents are hereby incorporated by reference into this
registration statement:
(a) Annual Report on form 10K-SB for the year ended December 31, 1999.
DATED: Vancouver, British Columbia, _____________________________, 2000
BRAINTECH, INC.
#102 - 930 West 1st Street
North Vancouver, BC
V7P 3N4
<PAGE>
BRAINTECH, INC.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Owen L. J. Jones and W. Grant Sutherland and
each of them as Proxies, each with the power to appoint his/her substitute,
and authorizes them to represent and to vote, as designated below, all of the
shares of common stock of which the undersigned is entitled to vote at the
Annual Meeting of Shareholders to be held on May 17, 2000 at 1:00 p.m. (local
time) at the Four Seasons Hotel, 791 West Georgia Street, Vancouver, British
Columbia, Canada and any adjournments thereof, on the matter, set forth below:
1. To elect as a director: In Favour Withhold Vote
OWEN L.J. JONES / / / /
W. GRANT SUTHERLAND / / / /
JAMES SPEROS / / / /
2. Proposal to amend BrainTech's Articles of Incorporation to increase the
total number of authorized shares of common stock from 50,000,000 to
200,000,000
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the 2000 Stock Option Plan
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
- 2 -
4. Proposal to ratify the 1997 Stock Option Plan and grants of options under
this Plan
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
This proxy will be voted as directed or, if no direction is indicated, this
proxy will be voted for every item listed above.
Dated: ___________________, 2000
_________________________________
Signature
_________________________________
Signature held jointly
This proxy should be signed by the shareholder exactly as his/her name
appears hereon, when shares are held jointly, both owners should sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Please mark, sign, date, and return proxy card promptly using the enclosed
envelope.
<PAGE>
APPENDIX 1
STOCK OPTION PLAN
BRAINTECH, INC.
FEBRUARY 11, 2000
ARTICLE I
PURPOSE OF PLAN
The purpose of this Plan is to strengthen BrainTech, Inc.
(hereinafter referred to as the "Company") by providing an additional means
of attracting and retaining competent directors, officers, employees and
consultants and by providing to such persons added incentive for high levels
of performance and for unusual efforts to increase the sales and earnings of
the Company. The Plan seeks to accomplish these purposes and results by
providing a means whereby such persons may purchase shares of the capital
stock of the Company pursuant to options.
ARTICLE II
ADMINISTRATION OF PLAN
SECTION 2.01. BOARD TO ADMINISTER. This Plan shall be administered
by the Board of Directors of BrainTech, Inc. (hereinafter referred to as the
"Board"). Any action of the Board with respect to administration of the Plan
shall be taken pursuant to a majority vote, or to the written consent of a
majority of its members.
SECTION 2.02. AUTHORITY. Subject to the express provisions of the
Plan, the Board shall have the authority to construe and interpret the Plan
and to define the terms used herein; to prescribe, amend and rescind the
rules and regulations relating to the administration of the Plan; and to make
all other determinations necessary or advisable for the administration of the
Plan. The determination of the Board on the foregoing matters shall be
conclusive. Subject to the express
<PAGE>
- 2 -
provisions of the Plan, the Board shall determine from the eligible class the
individuals who shall receive options, and the terms and provisions of the
options (which need not be identical).
ARTICLE III
PARTICIPATION
SECTION 3.01. ELIGIBILITY. Directors, officers and employees of the
Company and consultants to the Company shall be eligible for selection to
participate in the Plan. An individual who has been granted an option may, if
otherwise eligible, be granted an additional option or options if the Board
shall so determine.
SECTION 3.02. TIME OF GRANTING OPTION. The granting of an option
pursuant to this Plan shall take place at the time the Board designates an
eligible director, officer, employee or consultant as a participant in the
Plan; provided, however, that if the appropriate resolutions of the Board
indicate that an option is to be granted as of and at some future date, the
date of grant shall be such future date.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
Subject to the adjustments as provided in Article XII of this Plan,
the stock to be offered under this Plan shall be shares of the Company's
authorized but unissued common stock, including reaquired common stock or
common stock previously issued but cancelled. Subject to the following
proviso, the aggregate amount of stock to be delivered upon the exercise of
all options granted under this Plan shall not exceed 7.5 million (7,500,000)
shares. At no time shall the aggregate amount of stock to be delivered upon
exercise of all options granted under this Plan and the December 17, 1997
Stock Option Plan exceed 30% of the outstanding shares of the Common Stock of
the Company. If any option granted hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for the purposes of this Plan.
Subject to the general limitations contained in this Plan, the
<PAGE>
- 3 -
Board may make any adjustment in the exercise price, the number of shares
subject to, or the term of an option by amendment of said option or by
cancellation of an outstanding option and subsequent regranting of an option.
An option that is the result of amendment or substitution may have an
exercise price which is higher or lower than the prior option, provide for a
greater or lesser number of shares subject to the option, or a longer or
shorter term than the prior option, and may otherwise be changed as the
Board, in its discretion, sees fit.
ARTICLE V
OPTION PRICE
The purchase price of stock covered by each option shall be
determined by the Board. The purchase price of any stock purchased shall be
paid in full by bank draft or by certified cheque at the time of each
purchase, or shall be paid in such other manner as the Board may determine in
compliance with applicable laws.
ARTICLE VI
OPTION PERIOD
Each option and all rights or obligations thereunder shall expire on
such date as the Board shall determine, but not later than the fifth (5th)
anniversary of the date on which the option is granted, and shall be subject
to earlier termination as hereinafter provided.
ARTICLE VII
PRIVILEGES OF STOCK OWNERSHIP
The holder of an option pursuant to the Plan shall not be entitled
to the privileges of stock ownership as to any shares of stock not actually
issued and delivered to him.
<PAGE>
- 4 -
ARTICLE VIII
EXERCISE OF OPTION
Each option may be exercised in accordance with its terms and the
total number of shares subject thereto may be purchased, in instalments,
which need not be equal. No option or instalment thereof shall be exercisable
except in respect to whole shares, and fractional share interests shall be
disregarded.
ARTICLE IX
COMPLIANCE WITH SECURITIES LAWS
Shares shall not be issued pursuant to the exercise of an option
unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the SECURITIES ACT of 1933, as amended, the
EXCHANGE ACT, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange.
As a condition to the exercise of an option, the optionor may
require the optionee to represent and warrant at the time of any such
exercise that the shares purchased are being purchased only for investment
and without any present intention to sell or distribute such shares if, in
the opinion of counsel for the optionor, such a representation is required by
law.
Further, the optionor shall have no liability whatsoever (including,
but not restricted to, alternate compensation) to the optionee if a change in
the exercise price or a change in the terms and provisions of an option
and/or this Stock Option Plan hereof is required pursuant to any applicable
laws.
The optionor and optionee shall comply with all relevant provisions
of law relating to this Stock Option Plan and any option granted hereunder.
<PAGE>
- 5 -
ARTICLE X
DEATH AND TERMINATION
SECTION 10.01. AGREEMENT TO REMAIN IN EMPLOY OF COMPANY. Each person
to whom an option is granted is not required to remain in the employ of the
Company following the date of the grant of the option. Nothing contained in
this Plan, or in any option granted pursuant to this Plan, shall confer upon
any employee any right to continue in the employ of the Company or constitute
any contract or agreement of employment or interfere in any way with the
right of the Company to reduce such person's compensation from the rate in
existence at the time of the granting of an option or to terminate such
person's employment, but nothing contained herein or in any option agreement
shall affect any contractual rights of an employee.
SECTION 10.02. DEATH OF AN EMPLOYEE. If any option holder dies while
employed by the Company, such holder's option shall, subject to earlier
termination pursuant to Article VI, expire two years (2) years after the date
of such death, and during such period after such death such option may, to
the extent that the optionee may have exercised the option if alive during
such period, be exercised by the person or persons to whom the options
holder's rights under the option shall pass by will or by the applicable laws
of descent and distribution.
SECTION 10.03. TERMINATION OF EMPLOYMENT. If an optionee ceases to
be employed by the Company because of discharge for cause, such optionee's
option shall expire concurrently with such cessation of employment. THIS
SECTION 10.03 SHALL NOT APPLY IN RESPECT OF AN OPTION, OR THAT PORTION OF AN
OPTION, THAT HAS FULLY VESTED IN AN OPTIONEE.
SECTION 10.04. RESIGNATION. If an optionee resigns or ceases to be
employed by the Company for any reason other than death or discharge for
cause, such holder's option shall, subject to earlier termination pursuant to
Article VI, expire thirty (30) days thereafter (or such period of time
greater than 30 days as the Board may determine or the Company may have
agreed to contractually), and during such period after such holder ceases to
be an employee, such option shall
<PAGE>
- 6 -
be exercisable only to the extent the optionee could have exercised the
option at the date the optionee ceased to be employed by the Company.
ARTICLE XI
NONTRANSFERABILITY OF OPTIONS
An option granted under this Plan shall, by its terms, be
nontransferable by the option holder other than by will or by the laws of
descent and distribution and shall be exercisable during his lifetime only by
the option holder.
ARTICLE XII
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
SECTION 12.01. CORPORATE REORGANIZATIONS. If the outstanding shares
of the stock of the Company are increased, decreased or changed into, or
exchanged for, a different number or kind of shares or securities of the
Company through reorganization, recapitalization, reclassification, stock
split, stock dividend, stock consolidation, or merger as a result of which
the Company is the surviving corporation, or otherwise, an appropriate and
proportionate adjustment shall be made in the number and kind of shares as to
which options may be granted. A corresponding adjustment changing the number
of shares and the exercise price per share allocated to unexercised options
or portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment, however, in an outstanding
option shall be made without change in the total price applicable to the
unexercised portion of the option but with a corresponding adjustment in the
price for each share covered by the option.
SECTION 12.02. DISSOLUTION, LIQUIDATION. Upon the dissolution or
liquidation of the Company, or upon reorganization, merger or consolidation
of the Company with one or more corporations as a result of which the Company
is not the surviving corporation, or upon the sale of substantially all of
the property of the Company to another corporation, this Plan shall
terminate, and any option theretofore granted hereunder shall terminate,
unless provision be made in
<PAGE>
- 7 -
connection with such transaction for the assumption of options theretofore
granted, or the substitution for such options of new options covering the
stock of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices.
SECTION 12.03. ADJUSTMENTS MADE BY BOARD. Adjustments pursuant to
this Article XII shall be made by the Board, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding,
and conclusive. No fractional shares of stock shall be issued under the Plan
on account of any such adjustment.
ARTICLE XIII
INCOME TAX LAWS
The Company and all optionees shall comply with all applicable
income tax laws and other tax laws (eg. any withholding tax or similar
obligations).
ARTICLE XIV
AMENDMENT AND TERMINATION
The Board may at any time suspend, amend or terminate this Plan as
the Board, in its own discretion, sees fit. No option may be granted during
any suspension of the Plan or after such termination. The amendment,
suspension or termination of the Plan shall not, without the consent of the
option holder, alter or impair any rights or obligations under any option
theretofore granted under the Plan.
<PAGE>
- 8 -
ARTICLE XV
TERMINATION
Unless terminated sooner by the Board of Directors, this Plan shall
terminate at the close of business on February 11, 2010.
This Stock Option Plan is hereby approved and confirmed by the Board of
BrainTech, Inc.:
"Owen Jones"
------------------------------------
Owen Jones, Director
"Grant Sutherland"
------------------------------------
Grant Sutherland, Director
"James Speros"
------------------------------------
James Speros, Director
<PAGE>
APPENDIX 2
STOCK OPTION PLAN
BRAINTECH, INC.
DECEMBER 17, 1997
ARTICLE I
PURPOSE OF PLAN
The purpose of this Plan is to strengthen BrainTech, Inc.
(hereinafter referred to as the "Company") by providing an additional means
of attracting and retaining competent directors, officers, employees and
consultants and by providing to such persons added incentive for high levels
of performance and for unusual efforts to increase the sales and earnings of
the Company. The Plan seeks to accomplish these purposes and results by
providing a means whereby such persons may purchase shares of the capital
stock of the Company pursuant to options.
ARTICLE II
ADMINISTRATION OF PLAN
SECTION 2.01. BOARD TO ADMINISTER. This Plan shall be administered by
the Board of Directors of BrainTech, Inc. (hereinafter referred to as the
"Board"). Any action of the Board with respect to administration of the Plan
shall be taken pursuant to a majority vote, or to the written consent of a
majority of its members.
SECTION 2.02. AUTHORITY. Subject to the express provisions of the
Plan, the Board shall have the authority to construe and interpret the Plan
and to define the terms used herein; to prescribe, amend and rescind the
rules and regulations relating to the administration of the Plan; and to make
all other determinations necessary or advisable for the administration of the
Plan. The determination of the Board on the foregoing matters shall be
conclusive. Subject to the express provisions of the Plan, the Board shall
determine from the eligible class the individuals who shall receive options,
and the terms and provisions of the options (which need not be identical).
<PAGE>
- 2 -
ARTICLE III
PARTICIPATION
SECTION 3.03. ELIGIBILITY. Directors, officers and employees of the
Company and consultants to the Company shall be eligible for selection to
participate in the Plan. An individual who has been granted an option may, if
otherwise eligible, be granted an additional option or options if the Board
shall so determine.
SECTION 3.02. TIME OF GRANTING OPTION. The granting of an option
pursuant to this Plan shall take place at the time the Board designates an
eligible director, officer, employee or consultant as a participant in the
Plan; provided, however, that if the appropriate resolutions of the Board
indicate that an option is to be granted as of and at some future date, the
date of grant shall be such future date.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
Subject to the adjustments as provided in Article XII of this Plan,
the stock to be offered under this Plan shall be shares of the Company's
authorized but unissued common stock, including reaquired common stock or
common stock previously issued but cancelled. The aggregate amount of stock
to be delivered upon the exercise of all options granted under this Plan
shall not exceed 7.5 million (7,500,000) shares. If any option granted
hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of this Plan. Subject to the general limitations
contained in this Plan, the Board may make any adjustment in the exercise
price, the number of shares subject to, or the term of an option by amendment
of said option or by cancellation of an outstanding option and subsequent
regranting of an option. An option that is the result of amendment or
substitution may have an exercise price which is higher or lower than the
prior option, provide for a greater or lesser number of shares subject to the
option, or a longer or shorter term than the prior option, and may otherwise
be changed as the Board, in its discretion, sees fit.
<PAGE>
- 3 -
ARTICLE V
OPTION PRICE
The purchase price of stock covered by each option shall be
determined by the Board. The purchase price of any stock purchased shall be
paid in full by bank draft or by certified cheque at the time of each
purchase, or shall be paid in such other manner as the Board may determine in
compliance with applicable laws.
ARTICLE VI
OPTION PERIOD
Each option and all rights or obligations thereunder shall expire on
such date as the Board shall determine, but not later than the fifth (5th)
anniversary of the date on which the option is granted, and shall be subject
to earlier termination as hereinafter provided.
ARTICLE VII
PRIVILEGES OF STOCK OWNERSHIP
The holder of an option pursuant to the Plan shall not be entitled
to the privileges of stock ownership as to any shares of stock not actually
issued and delivered to him.
ARTICLE VIII
EXERCISE OF OPTION
Each option may be exercised in accordance with its terms and the
total number of shares subject thereto may be purchased, in instalments,
which need not be equal. No option or instalment thereof shall be exercisable
except in respect to whole shares, and fractional share interests shall be
disregarded.
<PAGE>
- 4 -
ARTICLE IX
COMPLIANCE WITH SECURITIES LAWS
Shares shall not be issued pursuant to the exercise of an option
unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the SECURITIES ACT of 1933, as amended, the
EXCHANGE ACT, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange.
As a condition to the exercise of an option, the optionor may
require the optionee to represent and warrant at the time of any such
exercise that the shares purchased are being purchased only for investment
and without any present intention to sell or distribute such shares if, in
the opinion of counsel for the optionor, such a representation is required by
law.
Further, the optionor shall have no liability whatsoever (including,
but not restricted to, alternate compensation) to the optionee if a change in
the exercise price or a change in the terms and provisions of an option
and/or this Stock Option Plan hereof is required pursuant to any applicable
laws.
The optionor and optionee shall comply with all relevant provisions
of law relating to this Stock Option Plan and any option granted hereunder.
ARTICLE X
DEATH AND TERMINATION
SECTION 10.01. AGREEMENT TO REMAIN IN EMPLOY OF COMPANY. Each person
to whom an option is granted is not required to remain in the employ of the
Company following the date of the grant of the option. Nothing contained in
this Plan, or in any option granted pursuant to this Plan, shall confer upon
any employee any right to continue in the employ of the Company or constitute
any contract or agreement of employment or interfere in any way with the
right of the Company to reduce such person's compensation from the rate in
existence at the time of the granting of an
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option or to terminate such person's employment, but nothing contained herein
or in any option agreement shall affect any contractual rights of an employee.
SECTION 10.02. DEATH OF AN EMPLOYEE. If any option holder dies while
employed by the Company, such holder's option shall, subject to earlier
termination pursuant to Article VI, expire two years (2) years after the date
of such death, and during such period after such death such option may, to
the extent that the optionee may have exercised the option if alive during
such period, be exercised by the person or persons to whom the options
holder's rights under the option shall pass by will or by the applicable laws
of descent and distribution.
SECTION 10.03. TERMINATION OF EMPLOYMENT. If an optionee ceases to
be employed by the Company because of discharge for cause, such optionee's
option shall expire concurrently with such cessation of employment. THIS
SECTION 10.03 SHALL NOT APPLY IN RESPECT OF AN OPTION, OR THAT PORTION OF AN
OPTION, THAT HAS FULLY VESTED IN AN OPTIONEE.
SECTION 10.04. RESIGNATION. If an optionee resigns or ceases to be
employed by the Company for any reason other than death or discharge for
cause, such holder's option shall, subject to earlier termination pursuant to
Article VI, expire thirty (30) days thereafter (or such period of time
greater than 30 days as the Board may determine), and during such period
after such holder ceases to be an employee, such option shall be exercisable
only to the extent the optionee could have exercised the option at the date
the optionee ceased to be employed by the Company.
ARTICLE XI
NONTRANSFERABILITY OF OPTIONS
An option granted under this Plan shall, by its terms, be
nontransferable by the option holder other than by will or by the laws of
descent and distribution and shall be exercisable during his lifetime only by
the option holder.
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ARTICLE XII
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
SECTION 12.01. CORPORATE REORGANIZATIONS. If the outstanding shares
of the stock of the Company are increased, decreased or changed into, or
exchanged for, a different number or kind of shares or securities of the
Company through reorganization, recapitalization, reclassification, stock
split, stock dividend, stock consolidation, or merger as a result of which
the Company is the surviving corporation, or otherwise, an appropriate and
proportionate adjustment shall be made in the number and kind of shares as to
which options may be granted. A corresponding adjustment changing the number
of shares and the exercise price per share allocated to unexercised options
or portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment, however, in an outstanding
option shall be made without change in the total price applicable to the
unexercised portion of the option but with a corresponding adjustment in the
price for each share covered by the option.
SECTION 12.02. DISSOLUTION, LIQUIDATION. Upon the dissolution or
liquidation of the Company, or upon reorganization, merger or consolidation
of the Company with one or more corporations as a result of which the Company
is not the surviving corporation, or upon the sale of substantially all of
the property of the Company to another corporation, this Plan shall
terminate, and any option theretofore granted hereunder shall terminate,
unless provision be made in connection with such transaction for the
assumption of options theretofore granted, or the substitution for such
options of new options covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices.
SECTION 12.03. ADJUSTMENTS MADE BY BOARD. Adjustments pursuant to
this Article XII shall be made by the Board, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding,
and conclusive. No fractional shares of stock shall be issued under the Plan
on account of any such adjustment.
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ARTICLE XIII
INCOME TAX LAWS
The Company and all optionees shall comply with all applicable
income tax laws and other tax laws (eg. any withholding tax or similar
obligations).
ARTICLE XIV
AMENDMENT AND TERMINATION
The Board may at any time suspend, amend or terminate this Plan as
the Board, in its own discretion, sees fit. No option may be granted during
any suspension of the Plan or after such termination. The amendment,
suspension or termination of the Plan shall not, without the consent of the
option holder, alter or impair any rights or obligations under any option
theretofore granted under the Plan.
ARTICLE XV
TERMINATION
Unless sooner terminated by the Board of Directors, this Plan shall
terminate at the close of business on December 16, 2007.
This Stock Option Plan is hereby approved and confirmed by the Board of
BrainTech, Inc.:
"Owen Jones"
--------------------------
Owen Jones, Director
"John McDonald"
--------------------------
John McDonald, Director
"Grant Sutherland"
--------------------------
Grant Sutherland, Director
