SCHEDULE 14C AND 14F
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C AND SCHEDULE 14F INFORMATION
Information Statement Pursuant to Section 14(c) and Section 14(f)
of the Securities Exchange Act of 1934 (Amendment No. )
|X| Preliminary Information Statement
|_| Confidential, for use of the Commission only (as permitted by Rule
14c-5(d)(2)
|_| Definitive Information Statement
WIN-GATE EQUITY GROUP, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transactions applies.
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(2) Aggregate number of securities to which transaction applies.
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(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).
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
WIN-GATE EQUITY GROUP, INC.
100 N. BISCAYNE BOULEVARD, SUITE 2500
MIAMI, FLORIDA 33132
------------------
NOTICE OF 2000 ANNUAL MEETING OF WIN-GATE SHAREHOLDERS
TO BE HELD NOVEMBER 17, 2000
To the Win-Gate Equity Group, Inc. Shareholders:
The 2000 annual meeting of Win-Gate Equity Group, Inc. Shareholders will be held
on November 17, 2000, at 10:00 a.m., local time, at the offices of Proskauer
Rose LLP, 1585 Broadway, New York, New York 10036-8299. The purposes of the
meeting are to:
o Elect three directors to serve until the next annual shareholders'
meeting,
o Change our corporate name from Win-Gate Equity Group, Inc. to
Globaltron Corporation,
o Increase the number of shares of authorized our stock from
-20 million shares of Common Stock to 100 million shares of
Common Stock, and
-five million shares of Preferred Stock to 20 million shares
of Preferred Stock,
o Adopt the 2000 Win-Gate Stock Incentive Plan, and
o Ratify Grant Thornton LLP as our Independent Certified Public
Accountants.
By Order of the Board of Directors
/s/ Gary D. Morgan
Gary D. Morgan
Chairman of the Board of Directors
Miami, Florida
October 26, 2000
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
<PAGE>
WIN-GATE EQUITY GROUP, INC.
100 N. BISCAYNE BOULEVARD, SUITE 2500
MIAMI, FLORIDA 33132
------------------
INFORMATION STATEMENT WIN-GATE EQUITY GROUP, INC.'S
2000 ANNUAL MEETING OF WIN-GATE SHAREHOLDERS
TO BE HELD NOVEMBER 17, 2000
NO VOTE OR OTHER ACTION OF WIN-GATE'S SHAREHOLDERS IS REQUIRED IN CONNECTION
WITH THE INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement contains information about the 2000 Annual Meeting of
the Shareholders of Win-Gate Equity Group, Inc., a Florida corporation
("Win-Gate"), to be held on November 17, 2000 at 10:00 a.m. local time at the
offices of Proskauer Rose LLP, 1585 Broadway, New York, New York 10036-8299.
This Information Statement is being mailed on or about October 26, 2000 to those
persons who were Win-Gate shareholders as of October 16, 2000 (the "Record
Date"). Win-Gate's Common Stock is currently our only outstanding class. At the
Annual Meeting, shareholders will vote on the following five proposals (the
"Proposals"):
1. To elect three Directors to Win-Gate's Board of Directors;
2. To amend Win-Gate's Articles of Incorporation to change our corporate name
from Win-Gate Equity Group, Inc. to Globaltron Corporation;
3. To amend Win-Gate's Articles of Incorporation to change our capitalization
from
a. 20 million shares of Common Stock to 100 million shares of Common
Stock, and
b. five million shares of Preferred Stock to 20 million shares of
Preferred Stock;
4. To adopt the 2000 Win-Gate Equity Group Stock Incentive Plan; and
5. To ratify the appointment of Grant Thornton LLP as our Independent
Certified Public Accountants.
Who May Vote at the Annual Meeting?
Only shareholders of record at the close of business on October 16, 2000 may
vote at the meeting.
How Many Shares of Win-Gate Common Stock were Outstanding as of the Record Date?
As of October 16, 2000, our Record Date, 19,136,702 shares of Win-Gate Common
Stock were issued and outstanding. Each share of Common Stock owned entitles the
holder to one vote.
What Vote Is Required to Approve Each of the Proposals?
Pursuant to
o Win-Gate's Bylaws, a plurality of the outstanding shares of voting
capital stock entitled to vote is required to elect Directors to
Win-Gate's Board
o Florida Statute Section 607.1003, a majority of the outstanding shares
of voting capital stock entitled to vote is required to
<PAGE>
--amend our Articles of Incorporation to change
-our corporate name from Win-Gate Equity Group, Inc. to
Globaltron Corporation; and
-our capitalization from
20 million shares of Common Stock to 100 million shares of
Common Stock, and five million shares of Preferred Stock to 20
million shares of Preferred Stock;
--adopt the 2000 Win-Gate Stock Incentive Plan, and
--ratify Grant Thornton LLP as our Independent Certified Public
Accountants.
When is this Information Statement Being Sent?
The date on which this Information Statement is intended to be sent to the
Shareholders is on or about October 26, 2000. We are required to send this
Information Statement at least 20 calendar days prior to the earliest date in
which the corporate action may be taken. We expect that each of the Proposals
will be effective on or about November 17, 2000 which is the date of our Annual
Meeting.
Why Isn't Win-Gate Required to Solicit Votes for the Proposals?
In order to eliminate the costs and management time involved in holding a
special meeting and effect each of the Proposals as early as possible, to
accomplish Win-Gate's purposes as we describe below, our Board of Directors has
approved and recommended each of the Proposals and a majority in interest of
Win-Gate Shareholders have voted by written consent to approve each of the
Proposals. The written consent will be effective as of the date of the Annual
Meeting.
How Many Shares are Currently Required to Effect the Written Consent
9,578,352 shares of our Common Stock, which represents a majority in interest of
our outstanding Common Stock as of the Record Date, is required to effect a
written consent.
As of the Record Date, approximately nine Shareholders (the "Consenting
Shareholders") holding, in the aggregate, 12,044,000 shares of Common Stock
(which represents approximately 62.9% of Win-Gate's outstanding Common Stock as
of the Record Date) have executed a written consent in favor of each of the
Proposals that will be effective 20 days following the mailing of this
Information Statement. The Consenting Shareholders include, among others, Gary
Morgan, our Chairman of the Board, Gary P. Stukes, our President, and Alvaro
Davila Pena, our Vice-President and Chief Operating officer of Latin American
Operations and a Win-Gate Director.
When Will Each of the Proposals Become Effective?
Under federal securities laws, none of the Proposals are effective until at
least 20 days after mailing this Information Statement (November 17, 2000) which
is also the date of the Annual Meeting.
Proposal No. 1 (to Elect Directors), Proposal No. 4 (to Adopt the 2000 Win-Gate
Stock Incentive Plan) and Proposal No. 5 (to Ratify the Appointment of Grant
Thornton LLP as our Independent Certified Public Accountants) will become
effective on or about November 17, 2000, which is approximately 20 days after
the mailing of this Information Statement, the date the written consent of a
majority interest of Win-Gate shareholders approving each of these Proposals
will be effective, and the date of our Annual Meeting.
Proposal No. 2 (to Change our Corporate Name) and Proposal No. 3 (to Increase
our Authorized Shares) will become effective upon our filing Articles of
Amendment to Win-Gate's Articles of Incorporation with the Secretary of State
2
<PAGE>
of Florida. This will occur on or about November 17, 2000, which is the date of
our Annual Meeting and is also the date the written consent of a majority in
interest of Win-Gate shareholders approving each of these Proposals will be
effective.
No additional action is required by our Shareholders in connection with
the amendments to Win-Gate's Articles of Incorporation to change our
corporate name, to increase the number of authorized shares of Common
Stock and Preferred Stock, or adopt the 2000 Win-Gate Stock Incentive
Plan. However, Section 14(c) of the Exchange Act requires the mailing to
our Shareholders of the information set forth in this Information
Statement at least twenty days prior to the earliest date on which the
corporate action may be taken.
What Benefits Will Our Directors Receive By Recommending Each of the Proposals?
Because our directors, along with our executive officers, currently hold
approximately 24.2% of Win-Gate's outstanding Common Stock, our management
currently can generally approve most shareholder proposals without seeking
additional votes from other Win-Gate shareholders. Our directors and executive
officers have a fiduciary obligation to vote in our Shareholders' best
interests. However, a vote "for" any of the Proposals by a majority of our
directors where certain members of our management may receive personal benefits
does not negate the vote so long as any interested director discloses that he or
she could benefit financially, nor participates in discussions, or votes on
matters where that director may personally benefit.
On October 2, 2000, the members of our Board of Directors adopted each of the
Proposals. Our Board of Directors does not believe that any of the Proposals
will personally benefit any Director.
How Will Our Shareholders Know When the Proposals are Effective?
Inasmuch as Win-Gate will have provided this Information Statement to our
Shareholders of record, we will notify our Shareholders of the effective dates
of each of the Proposals described in this Information Statement when we
distribute our next Annual Report on Form 10-KSB or our Quarterly Report on Form
10-QSB. No additional action will be undertaken pursuant to the written
consents, and no dissenters' rights under the Florida Law are afforded to
Win-Gate Shareholders as a result of adopting any of the Proposals.
Who will Pay for the Costs Associated with this Information Statement?
Win-Gate will pay all costs associated with the distribution of this Information
Statement, including the costs of printing and mailing. Win-Gate will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending this Information Statement to the
beneficial owners of Win-Gate's Common Stock.
Where are Our Executive Offices Located?
Our principal executive offices are located at 100 N. Biscayne Boulevard, Suite
2500, Miami, Florida 33132 and our telephone number is (305) 371-3300.
3
<PAGE>
OUTSTANDING VOTING STOCK OF WIN-GATE
The following table shows, as of October 16, 2000, the Common Stock owned
beneficially by (i) each of our Executive Officers, (ii) each of our current
Directors and each "Nominee for Director", (iii) all Executive Officers and
Directors as a group, and (iv) each person known by us to be the "beneficial
owner" of more than five percent of our Common Stock. "Beneficial ownership" is
a technical term broadly defined by the Securities and Exchange Commission to
mean more than ownership in the usual sense. For example, you "beneficially" own
Common Stock not only if you hold it directly, but also if you indirectly
(through a relationship, a position as a director or trustee, or a contract or
understanding), have (or share the power to vote the stock, or sell it) the
right to acquire it within 60 days. Except as disclosed in the footnotes below,
each of the Executive Officers, Directors and Nominees for Directors listed have
sole voting and investment power over his shares. As of October 16, 2000, there
were 19,136,702 shares of Common Stock issued and outstanding and approximately
395 holders of record. Proposal No. 3 discusses the specific terms of our Common
Stock and our "blank check" Preferred Stock.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Name(1) Current Title Owned Owned
<S> <C> <C> <C>
Gary D. Morgan(2)(3) Chairman of the Board of Directors 4,000,000 20.9%
Kevin P. Fitzgerald(3)(4) Chief Executive Officer and Nominee for Director 192,000 **
Gary D. Stukes President and Chief Operating Officer 275,000 1.4%
David Walsh(5) Vice President of Finance of Globaltron 250,000 1.3%
Alvaro Davila Pena (3)(6) President and Chief Operating officer of Latin 100,000 **
American Operations, Director
Roman Fisher(7) Director -0- -0-
All Executive Officers, Directors and 4,817,000 24.6%
Nominees for Directors as a group
(six persons)
Oriental Allied Holdings(8) 1,000,000 5.2%
Tremaine Trading Co.(9) 4,294,000 22.4%
</TABLE>
-------------
*Less than 1%.
(1) Except as described in the following notes, the address for each of
Win-Gate's Directors, Executive Officers and Nominees for Directors is 100
N. Biscayne Boulevard, Suite 2500, Miami, Florida 33132.
(2) As an inducement for GNB Bank of Panama to lend Win-Gate $5.0 million plus
interest, pursuant to a letter dated February 29, 2000 (the "February
Letter Agreement") from Gary D. Morgan, Win-Gate's Chief Executive Officer
and Chairman of the Board, to GNB Bank, Mr. Morgan agreed to the
following:
(a) Through February 29, 2003, he would not sell, exchange or
transfer any or all of his Win-Gate Common Stock, other than in the
event of a merger, consolidation or sale of assets, or other
reorganization,
(b) After February 29, 2003, if and to the extent he transfers all
or part of his Common Stock, GNB Bank has tag-along rights on any
Common Stock sold or transferred by Mr. Morgan, on the same terms
and conditions,
(c) To vote his Common Stock in favor of GNB Bank's designees
nominated to serve as one member of Win-Gate's Board of Directors,
and
4
<PAGE>
(d) Will not vote his Common Stock without GNB Bank's permission
regarding certain corporate actions.
If Mr. Morgan does not vote his shares according to Nos. (c) or (d) above,
then in addition to other rights and remedies that are available to GNB
Bank, Mr. Morgan will appoint GNB Bank as his irrevocable proxy.
GNB Bank has advised Win-Gate that as Mr. Morgan's proxy, it would have
voted in favor of each of the Proposals described in this Information
Statement.
(3) Will be standing for re-election.
(4) Represents options to purchase up to 192,000 shares at $5.50 per share
through October 1, 2010.
(5) Represents the right to purchase up to 250,000 shares at $.01 per share
within sixty days upon the happening of certain events.
(6) Mr. Pena's address is Carrera 23, #94-33, Bogota, Colombia.
(7) Will not be standing for re-election.
(8) The address is c/o Trident Trust Company, King's Court, Bay Street,
Nassau, Bahamas, Attention: Mr. Peter Waller.
(9) The address is c/o Proskauer Rose LLP, 1585 Broadway, New York, New York.
Legal Proceedings
Neither Win-Gate nor any of its subsidiaries is a party to any pending, or to
the best of its knowledge, any threatened legal proceedings.
PROPOSAL NO. 1:
TO ELECT THREE DIRECTORS TO SERVE UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDERS
OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND QUALIFIED.
MANAGEMENT
Below are our Executive Officers, Directors and Nominees for Director as of
October 16, 2000:
Name Age Position
--------------------------------------------------------------------------------
Gary D. Morgan 43 Chairman of the Board of Directors
Kevin P. Fitzgerald 44 Chief Executive Officer and Nominee for
Director
Gary P. Stukes 46 President and Chief Operating Officer
Alvaro Davila Pena 36 Vice President and Chief Operating Officer
of Latin American Operations, Director
David Walsh 53 Vice President of Finance of Globaltron
Roman Fisher 53 Director
5
<PAGE>
GARY D. MORGAN has been our Chairman of the Board since January 2000 and served
as our Chief Executive Officer from January 2000 to October 2, 2000. Mr. Morgan
has 22 years of experience in the telecommunications industry. From February
1999 to October 2, 2000, Mr. Morgan was the Chief Executive Officer and since
February 1999, he has been the Chairman of the Board of Globaltron
Communications Corporation, which became a wholly-owned subsidiary of Win-Gate
in January 2000. Mr. Morgan founded Pointe Communications Corporation, a
telecommunications company, in May 1998 where he served as the President and
Chief Operating Officer until February 1999. From January 1997 to February 1998,
Mr. Morgan was the Vice President of U.S. West - Lucent Technologies (NYSE:LU).
From January 1988 to December 1996, Mr. Morgan was the Vice President of RBOCS
Markets of Siemens Corporation. Mr. Morgan holds a Bachelor of Science in
Business Administration from Western Carolina University.
KEVIN P. FITZGERALD has served as our Chief Executive Officer since October 2,
2000. Mr. Fitzgerald was the President, CEO and a Director of NEFF Corporation
(NYSE: NFF), one of the largest equipment rental companies in the United States
from July 1995 to June 2000. He has been a Director of Sullair from 1998 through
1999, one of the largest equipment rental companies in Argentina and Supercanal,
Argentina's third-largest cable TV provider. Mr. Fitzgerald also serves on the
Boards of Latin Broadband Group, a fixed wireless provider in Argentina, the
Board of Geoworks Corporation (Nasdaq: GWRX), a wireless technology company and
TeleServices Group, a telecommunications interconnect company. From 1991 to July
1995, he was a Senior Vice President for the investment banking firm of Houlihan
Lokey Howard and Zukin. Mr. Fitzgerald holds an M.B.A. in Finance from Fordham
University and a B.S. in Electrical Engineering from Carnegie Mellon University.
GARY P. STUKES has been our President and Chief Operating Officer since January
2000. From July 1998 to December 1999, Mr. Stukes was the Senior Vice President
of Totaled Covista Communications (NMS:TELU), a telecommunications company. From
June 1997 to July 1998, Mr. Stukes was the Regional Vice President of Primus
Corporation (Nasdaq:PRTL), a telecommunications company. From May 1996 to June
1997, Mr. Stukes was a consultant to Starting Communications, Ltd., a financial
services company. From May 1993 to May 1996, Mr. Stukes was the President of
Results Oriented Associates, Inc., a business consulting company. Mr. Stukes
holds a Bachelor of Science in Marketing from the University of Bridgeport, a
Bachelor of Science from Jersey City State College and an MBA from Fairleigh
Dickinson University.
ALVARO DAVILA PENA has served as our Vice President and Chief Operating Officer
of Latin American Operations since January 2000, and has served as a member of
our Board of Directors since August 18, 2000. From February 1999 to present, Mr.
Davila has been a partner in and a member of the Board of Directors of Davila
Avocados LIDA, a law firm located in Bogota, Colombia. From March 1995 to
January 1999, Mr. Davila was a partner and a member of the Board of Directors of
Gomez Davila Associates, a law firm located in Bogota, Colombia. Mr. Davila was
a partner and a member of the Board of Directors of Graphic Production Systems,
a digital printing company from June 1999 until present. Mr. Davila was a member
of the Board of Directors of Nueva Television de Colombia, a television news
broadcasting company from August 1997 until March 1998. In addition, Mr. Davila
served as a member of the Assessment Committee of the Communication Law
Specialization program of the Javeriana University in Bogota, Colombia from
March 1995 to present. Mr. Davila holds a law degree from Universidad Colegio
Mayor de Nuestra Senora del Rosario.
DAVID WALSH has served as the Vice President of Finance of Globaltron since
August 1999. From August 1998 until August 1999, Mr. Walsh worked with Greengold
International, a management consulting firm. From August 1995 to August 1998,
Mr. Walsh was an Executive Vice President of Corporate Express, a services and
distribution company, and was responsible for business consolidations of six
acquired companies, four systems implementations, as well as alpha site
development of prototype warehouse management systems and processes. From June
1992 to February 1994, Mr. Walsh was the Vice President of Finance and
Administration for Gold Coast Beverage, a beverage distributor company and was a
part of a management team that acquired the third largest beverage distributor
in the United States. Mr. Walsh is published in Coors Brewing Priority Magazine.
Mr. Walsh received his undergraduate degree from Northern Illinois University,
holds a Masters of Accountancy from the University of Houston and is a licensed
Certified Public Accountant.
ROMAN FISHER was the President of Win-Gate from May 1999 to January 2000, has
been a member of its Board of Directors since May 1999 and has been a member of
the Board of Directors of Globaltron since January 2000. Since December 1998,
Mr. Fisher has been the Executive Vice President of Bork Consulting Corporation,
a financial consulting company. From January 1993 to December 1999, Mr.
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<PAGE>
Fisher was the Vice President of Crystal River MRI, Inc., a diagnostic imaging
company. From September 1996 to December 1998, Mr. Fisher was the Executive Vice
President of Metropolitan Health Networks (OTCBB:MDPA), a medical practice
management company. From September 1996 to December 1998, Mr. Fisher was the
Chief Operating Officer of MRI Scan Center, a diagnostic imaging company. From
February 1985 to September 1997, Mr. Fisher was the Director of Administration
of Magnetic Imaging Systems I, Ltd., a diagnostic imaging company. From February
1985 to January 1992, Mr. Fisher was the Executive Vice President of Medical
Diagnostic Services, a diagnostic imaging company. From January 1990 to December
1991, Mr. Fisher was the Vice President of Prolease, Inc., an equipment leasing
company. Mr. Fisher studied at the George Washington University in Washington,
D.C., received his LL.M. degree in International Law from the University of
Basel in Switzerland and a Masters of Science degree in Counseling Psychology
from Nova University.
NOMINEE FOR DIRECTORS
Each Director is elected at Win-Gate's Annual Meeting of Shareholders and holds
office until the next Annual Meeting of shareholders, or until the successors
are elected and qualified. At present, our bylaws provide for not less than one
nor more than nine Directors. Currently, we have five members on our Board. The
bylaws permit the Board of Directors to fill any vacancy and such director may
serve until the next Annual Meeting of Shareholders or until his successor is
elected and qualified. Officers are elected by the Board of Directors and their
terms of office are, except to the extent governed by employment contracts, at
the discretion of the Board. There are no family relations among any of our
executive officers or directors. Our officers devote full time to the business
of Win-Gate and/or our subsidiaries.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors currently does not have any committees, however, after
appointing the New Directors, the Board intends to form a Compensation
Committee, an Audit Committee and a Nominating Committee.
The function of the Compensation Committee will be to approve the salaries,
bonuses and other forms of compensation of Win-Gate's senior executives, review
transactions between Win-Gate and its affiliates, including any associates of
affiliates and administer the 2000 Win-Gate Equity Group Stock Incentive Plan
(the "Plan").
The Audit Committee will review the planned scope and results of audits,
consider any recommendations the auditors may make with respect to Win-Gate's
internal controls and procedures, oversee any responses made to such
recommendations and review certain filings with the SEC. Win-Gate also intends
to adopt a formal written charter specifying
o the scope of the Audit Committee's responsibilities,
o the means by which it carries out those responsibilities,
o the outside auditor's accountability to the Board and Audit
Committee, and
o the Audit Committee's responsibility to oversee the independence of
the outside auditor.
The Nominating Committee will be responsible for selecting those individuals who
will stand for election to our Board of Directors and will consider all
reasonable comments from Shareholders regarding proposed nominees for Directors
as well as nominations for Board members recommended by Shareholders. To date,
the Nominating Committee has no formal procedures for submitting comments or
recommendations and has accepted both written and oral comments as well as names
of proposed nominees prior to the filing of a definitive Proxy Statement or
Information Statement, as applicable. Typically, once a recommendation has been
received, the Committee will undertake due diligence, will discuss the comments
or the proposed nominee with the Shareholder submitting such proposal and, if
applicable, will meet with the proposed nominee before making a final
determination as to whether to recommend the proposed individual as a nominee to
the entire Board of Directors to stand for election to the Board of Directors.
Similarly, the Committee members will personally discuss comments regarding
proposed nominees with those Shareholders submitting the comments. To date, our
Board of Directors has been performing these duties.
7
<PAGE>
Win-Gate's Board of Directors met eight times during the fiscal year ended March
31, 2000. All directors then in office attended 100% of the meetings of the
Board held during the fiscal year ended March 31, 2000.
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Section 16(a) of the Securities Exchange Act of 1934, as amended requires our
Executive Officers, Directors and 10% Shareholders to file reports regarding
initial ownership and changes in ownership with the SEC and the Nasdaq Stock
Market, Inc. Executive Officers, Directors and 10% Shareholders are required by
SEC regulations to furnish us with copies of all Section 16 forms they file. Our
information regarding compliance with Section 16 is based solely on a review of
the copies of such reports furnished to us by our Executive Officers, Directors
and 10% Shareholders. These forms include (i) Form 3, which is the Initial
Statement of Beneficial Ownership of Securities, (ii) Form 4, which is a
Statement of Changes in Beneficial Ownership, and (iii) Form 5, which is an
Annual Statement of Changes in Beneficial Ownership.
Based solely on Win-Gate's review of these reports furnished to it or written
representations that no other reports were required, Win-Gate believes that all
Section 16(a) filing requirements were complied with during the year ended March
31, 2000.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain summary information for the fiscal year
ended March 31, 2000 concerning the compensation awarded to, earned by, or paid
to (1) those persons serving as Chief Executive Officer during fiscal year 2000,
(2) the other four most highly compensated executive officers serving as such as
of March 31, 2000 receiving an annual salary and bonus of $100,000 or more, and
(3) up to two additional individuals who served as an executive officer during
fiscal year 2000, but who were not executive officers at March 31, 2000, but who
received an annual salary and bonus of $100,000 or more. We refer to these
individuals as our "Named Executive Officers."
Summary Compensation Table For the Fiscal Year Ended March 31, 2000
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------
Restricted
Other Annual Stock LTIP All Other
Name and Principal Position Year Salary Bonus($) Compensation($) Awards($) Options/SARs Payouts($) Compensation
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary D. Morgan, 2000 $60,000 -0- -0- -0- -0- -0- -0-
Chairman and Chief
Executive Officer(1)
Debra Janssen, 2000 -0- -0- -0- -0- -0- -0- -0-
Former Chairman and 1999 -0- -0- -0- -0- -0- -0- -0-
Chief Executive Officer(2) 1998 -0- -0- -0- -0- -0- -0- -0-
Roman Fisher 2000 -0- -0- -0- -0- -0- -0- -0-
Former Chairman and
Chief Executive Officer(3)
James Cooney, 2000 $75,000 -0- 40,000(5) -0- -0- -0- -0-
Vice President and
General Counsel, Globaltron(4)
Gary P. Stukes, 2000 $276,000 (6) -0- -0- -0- -0- (7)
President and Chief
Operating Officer
</TABLE>
(1) Mr. Morgan served as our Chief Executive Officer from January 2000 until
October 2, 2000. He still serves as our Chairman of the Board of
Directors.
(2) Ms. Janssen resigned as Chairman and Chief Executive Officer on May 12,
1999.
(3) Mr. Fisher became the Chief Executive Officer on May 12, 1999 and resigned
in January 2000.
(4) Mr. Cooney ceased being the General Counsel of Globaltron on May 17, 2000
and he died in August 2000.
(5) Pursuant to a termination agreement dated May 17, 2000, an outstanding
debt of $40,000 was forgiven.
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<PAGE>
(6) Includes a bonus of 2% of the excess of the ending market cap over
beginning market cap of $150,000,000, based on the average closing price
of Win-Gate's Common Stock for the last 20 trading days of year 2000. For
years after 2000, the base for market cap is the first 20 days of the
trading year and the last 20 trading days of calendar year 2000. This
bonus structure continues through December 31, 2002. Through September 11,
2000, no bonus payments have been paid to Mr. Stukes.
(7) Mr. Stukes received incentive warrants for up to 500,000 shares of Common
Stock, exercisable in amounts up to 166,666 shares per year based upon
defined revenue and EBITDA performance goals. The purchase price for
shares granted under this program is $1.00 per share.
Stock Option Grants in Last Fiscal Year
During the fiscal year ended March 31, 2000, the following options were granted
to the following Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------------------------------------------------------------------
Number of Securities Percent of Total
Underlying Options/ Options/SARs Granted Exercise or
Name SARs Granted ($) to Employees in Fiscal Year Base Price ($SH) Expiration Date
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gary P. Stukes, 500,000 (1) 100% $1.00/share December 1, 2007
President, Chief Operating Officer
</TABLE>
(1) The warrants were granted to Mr. Stukes pursuant to his employment
agreement, up to one third of which may vest on December 31, 2000, up to
an additional one-third on December 31, 2001, and the final one-third on
December 31, 2002. The vesting schedule is based upon defined revenue and
EBITDA performance goals. Once vested, the warrants are exercisable for a
period of three years.
Other than the warrants granted to Mr. Stukes, Win-Gate issued an option in
November 1999 to an employee for 50,000 shares at an exercise price of $5.00 per
share. Half the option vests on November 15, 2000 and the remaining vest on
November 15, 2001. Additionally, pursuant to Kevin P. Fitzgerald's employment
agreement, Win-Gate granted him options to purchase up to 960,000 shares of
Common Stock at $5.50 per share (the fair market value) through October 1, 2010,
of which 192,000 vested on October 2, 2000 and options to purchase up to an
additional 192,000 shares will vest on each six month anniversary thereafter
(for a total of 960,000 options). Furthermore, there are options to purchase up
to an additional 41,000 shares to six company employees.
Proposal No. 4 describes the 2000 Win-Gate Stock Incentive Plan that has been
approved by our Board of Directors and will be adopted and ratified by a
majority in interest of our Shareholders pursuant to a written consent. Once the
Plan is effective, Win-Gate has agreed to issue options to acquire an aggregate
of approximately 985,000 shares to certain of our designated employees,
including Mr. Fitzgerald. It is also anticipated that additional options will be
issued from time to time under the Plan.
Option Exercises and Year End Values
The following table provides information on options exercised in the fiscal year
ended March 31, 2000 by the persons named in the "Summary Compensation Table"
above, the number of unexercised options each of them held at March 31, 2000 and
the value of the unexercised "in-the-money" options each of them held as of that
date.
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<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money
Shares Options/SAR at FY-End (#) Options/SARs at FY-End
Name Acquired Value Realized Exercisable/Unexercisable ($)
on Exercise (#) ($) Exercisable/Unexercisable
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gary P. Stukes -- -- 500,000 (1)
</TABLE>
(1) The warrants were granted to Mr. Stukes pursuant to his employment
agreement and are exercisable one-third on December 31, 2000; one-third on
December 31, 2001; and one-third on December 31, 2002 based upon defined
revenue and EBITDA performance goals.
COMPENSATION OF DIRECTORS
Directors currently receive no fees or remuneration for acting in their
capacities as Win-Gate Directors.
EMPLOYMENT AND CONSULTING AGREEMENTS
Kevin P. Fitzgerald. Effective October 2, 2000, Win-Gate entered into an
employment agreement with Kevin P. Fitzgerald, our Chief Executive Officer and a
nominee for Director. The agreement terminates on September 2, 2002 and is
automatically renewable for additional one-year terms unless either party gives
the other notice of non-extension in writing at least ninety days prior to the
end of the then current term. Pursuant to such employment agreement, Mr.
Fitzgerald is to receive an annual base salary of $300,000. The agreement also
provides that Mr. Fitzgerald is entitled to receive all normal Company benefits
and reimbursement for reasonable out-of-pocket expenses incurred in connection
with Company business. Additionally, the agreement provides for a bonus in our
Board's discretion. The agreement also provides that Mr. Fitzgerald is entitled
to receive options for up to 960,000 shares of our Common Stock, exercisable at
$5.50 per share through October 1, 2010, which options vest in 192,000
increments every six months; provided that Mr. Fitzgerald is employed as our CEO
pursuant to the agreement. He is also subject to confidentiality,
nonsolicitation and noncompetition provisions. At no time may he divulge any
confidential information concerning our business or trade secrets.
Additionally, during his employment and for one year thereafter, Mr. Fitzgerald
may not
o solicit or divert from us the telecommunications services of any person
or entity for which we provided telecommunications services at any time
during the period of 12 months immediately preceding the time of such
solicitation or diversion and with whom Mr. Fitzgerald has significant
contact, or solicit or induce any person employed by us to leave such
employment, or
o engage in the same line of business.
In the event of a change of control of Win-Gate (as defined in the employment
agreement), and we terminate Mr. Fitzgerald's employment, we will pay Mr.
Fitzgerald his base salary then in effect for the remaining term of the
agreement (together with such benefits as Mr. Fitzgerald would be entitled to
during that time).
Gary Stukes. Globaltron executed an employment agreement dated December 31, 1999
with Gary Stukes, our President. The agreement terminates on December 31, 2002
and is automatically renewable for additional one-year terms unless either party
gives the other notice of non-extension in writing at least ninety days prior to
the end of the then current term. Pursuant to such employment agreement, Mr.
Stukes is to receive an annual base salary of $276,000 for the portion of the
year ending December 31, 2000. The annual base salary for each additional
calendar year shall be increased by 7.5% over the base salary of the prior year.
The agreement also provides that Mr. Stukes is entitled to receive all normal
Company benefits, reimbursement for reasonable out-of-pocket expenses incurred
in connection with Company business and use of a premium class automobile.
Additionally, the agreement provides for a bonus based upon growth in our public
market capitalization ("market cap") equivalent to 2% of the excess of ending
market cap (as defined in the employment agreement) over the beginning market
cap (as defined in the employment agreement) for a 3-year period ending December
31, 2002. The agreement also provides that Mr. Stukes is entitled to receive
incentive warrants for up to 500,000 shares of our Common Stock, exercisable in
increments over a 3-year period, for attainment of specified revenue and EBITDA
goals. Pursuant to the employment agreement, Mr. Stukes is subject to
confidentiality, nonsolicitation and noncompetition provisions. At no time may
he divulge any confidential information concerning our business or trade
secrets.
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Additionally, during his employment and for one year thereafter, Mr. Stukes may
not
o solicit or divert from us the telecommunications services of any person
or entity for which we provided telecommunications services at any time
during the period of 12 months immediately preceding the time of such
solicitation or diversion and with whom Mr. Stukes has significant
contact, or solicit or induce any person employed by us to leave such
employment, or
o engage in the same line of business.
In consideration for the foregoing covenant not to solicit and not to compete,
we will pay Mr. Stukes a consulting fee (based on his same rate of pay as set
forth above) for one year following the termination of his employment. In the
event of a change of control of Win-Gate (as defined in the employment
agreement), and we terminate Mr. Stukes' employment, we will pay Mr. Stukes his
base salary then in effect for the remaining term of the agreement (together
with such benefits as Mr. Stukes would be entitled to during that time), and Mr.
Stukes would remain eligible to receive the market cap bonus attributable to
calendar years up to and including the year of termination and to exercise the
incentive warrants granted.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On January 21, 2000, Win-Gate completed a transaction with all of the
shareholders of Globaltron Communications Corporation (GCC). Pursuant to the
Agreement, Win-Gate acquired all of the issued and outstanding shares of GCC and
GCC has become a wholly-owned subsidiary of Win-Gate. As consideration for the
GCC shares, Win-Gate issued an aggregate of approximately 13.3 million shares of
Win-Gate's Common Stock to the former GCC shareholders. Prior to the
transaction,
o Gary D. Morgan, Win-Gate's current Chief Executive Officer and Chairman
of the Board, owned approximately 55% of GCC's shares,
o David Walsh, GCC's Vice President of Finance, owned 4.3% of GCC's
outstanding shares, and
o Gary P. Stukes, Win-Gate's President and Chief Operating Officer, owned
1.8% of GCC's outstanding shares.
Other than the transaction described above, Win-Gate is not aware of any
existing arrangements which may result in a change of control of Win-Gate.
Alvaro Davila Pena, Vice President and Chief Operating Officer of Latin American
Operations and a Director of Win-Gate, is an attorney and partner in the law
firm of Davila Davila Asociados LTDA in Bogota, Colombia. Mr. Pena and his law
firm perform certain legal services on Win-Gate's behalf. The fees for these
legal services are invoiced at the firm's normal and customary rates. Mr. Davila
is also reimbursed for all out-of-pocket expenses incurred in connection with
his performing legal services for us. As of July 31, 2000, the total amount
invoiced from the law firm to Win-Gate and its affiliates was $169,270.00
What is Our Board of Directors' Recommendation?
OUR BOARD OF DIRECTORS HAS NOMINATED THE SLATE OF DIRECTORS TO WIN-GATE'S
BOARD AND HAS RECOMMENDED A VOTE "FOR" ELECTING THREE ADDITIONAL
DIRECTORS TO SERVE UNTIL WIN-GATE'S NEXT ANNUAL MEETING OF ITS SHAREHOLDERS
OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND QUALIFIED.
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PROPOSAL NO. 2
TO AMEND OUR ARTICLES OF INCORPORATION TO CHANGE OUR NAME FROM WIN-GATE
EQUITY GROUP, INC. TO GLOBALTRON CORPORATION.
Background
Our Board of Directors unanimously adopted and the Consenting Shareholders have
approved amending Win-Gate's Articles of Incorporation to change our corporate
name from "Win-Gate Equity Group, Inc." to "Globaltron Corporation." The text of
this Amendment is attached as Appendix A.
Reasons for Changing Our Corporate Name.
Our Board of Directors believes that by changing our corporate name to that of
its principal operating subsidiary, Globaltron, the corporate name, will help to
promote our public recognition and more accurately reflect our business focus in
international telecommunications industry as a competitive multi-national
carrier.
What are the Effects on Win-Gate Shareholders With Regard to the Amendment
Change?
It will not be necessary for you to surrender your share certificates upon
approval of the proposed name change. Rather, when share certificates are
presented for transfer or other reasons, new share certificates bearing the name
"Globaltron Corporation." will be issued. Additionally, our Common Stock will
continue to trade under the symbol "WGEG", however we intend to change our
symbol to one that is associated with our new name. Because our Common Stock
currently trades on the OTC Bulletin Board, we do not have a choice in selecting
our new symbol, but it is chosen for us by the OTC.
What Does Our Board of Directors Recommend?
OUR BOARD OF DIRECTORS HAS RECOMMENDED A VOTE "FOR" CHANGING OUR
CORPORATE NAME TO GLOBALTRON CORPORATION.
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PROPOSAL NO. 3
TO AMEND OUR ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF
(A) COMMON STOCK FROM 20 MILLION TO 100 MILLION, AND
(B) PREFERRED STOCK FROM FIVE MILLION TO 20 MILLION.
Background
Our Board of Directors has unanimously adopted and the Consenting Shareholders
have approved an amendment to Win-Gate's Articles of Incorporation to increase
the authorized shares of
o Common Stock from 20 million shares to 100 million shares, and
o Preferred Stock, par value $.001, from five million shares to 20 million
shares.
The text of this Amendment is attached as Appendix A to this Information
Statement.
Current Number of Authorized Common Shares and Shares Required to be Reserved
As of the Record Date, 19,136,702 shares of Common Stock were outstanding, and
no shares of Preferred Stock were outstanding. Additionally, Win-Gate may issue
up to approximately
o an additional 1,551,000 shares of Common Stock reserved for issuance
pursuant to the exercise of stock options and warrants, and
o an additional 3,000,000 shares of Common Stock reserved for issuance
under the 2000 Stock Incentive Plan.
This number of shares does not include the number of shares that may be issued
upon conversion of the loan agreement with GNB Bank Panama, S.A. described
below.
Reasons for Authorizing Additional Shares of Common Stock.
By increasing our authorized shares of Common Stock and Preferred Stock, we will
have more than a sufficient number of shares to meet our current obligations. As
is demonstrated above, we currently do not have a sufficient number of shares of
Common Stock to meet our obligations. This means that we have no stock available
for future actions, including future fund-raising activities or acquisitions.
In March 2000, Win-Gate entered into a $5.0 million loan agreement with GNB Bank
Panama, S.A., as lender, and GCC, Win-Gate's wholly-owned subsidiary, as
guarantor, which loan agreement was modified in September 2000. The terms of the
Loan Agreement, as amended, provide that the promissory note may be converted
into approximately 500,000 shares of Win-Gate Common Stock at a future date upon
the happening of certain events. Additionally, Win-Gate is actively seeking
equity capital. As such, Win-Gate's Board of Directors believes that it is
Win-Gate's best interest to authorize additional shares of its Common Stock for
possible future issuances.
Increasing our number of authorized shares will also allow our Board flexibility
to act promptly in issuing stock to meet our future business needs, may which
include:
o Paying existing creditors,
o Financing transactions to improve our financial and business position,
o Stock splits or stock dividends,
o Acquisitions and mergers,
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<PAGE>
o Recruiting employees and executives,
o Employee benefit plans, and
o Other proper business purposes.
However, we cannot make any assurances, nor can the Board predict, what effect,
if any, the proposed increase in the number of authorized shares of Common Stock
and Preferred Stock will have on the market price of our Common Stock.
If additional shares are readily available, our Board of Directors will be able
to act quickly without spending the time and incurring the expense of soliciting
proxies and holding additional shareholders' meetings. The Board, however, may
issue additional shares of Common Stock and Preferred Stock without action on
the part of the shareholders only if the action is permissible under Florida
law, and only if the rules of the exchange on which the Common Stock is listed
permit those issuances. There are no additional costs or expenses due to the
State of Florida, where we are incorporated, as a result of the increase in
authorized shares, other than the costs associated with the filing of an
Amendment to our Articles of Incorporation.
Moreover, the additional authorized shares of Common Stock and Preferred Stock
may be used to discourage persons from attempting to gain control of Win-Gate by
diluting the voting power of shares then outstanding or increasing the voting
power of persons who would support the Board of Directors in opposing a takeover
bid or a solicitation in opposition to management. These shares could also be
used by the Board of Directors in a public or a private sale, merger or similar
transaction by increasing the number of outstanding shares and thereby diluting
the equity interest and voting power of a party attempting to obtain control of
Win-Gate. We are not currently aware of any effort to obtain control of Win-Gate
and have no plans to use the new shares for purposes of discouraging any such
effort. Issuing any additional shares of our Common Stock or possibly our
Preferred Stock would dilute our current Shareholders' interests in Win-Gate.
However, in addition to the Loan Agreement with GNB Bank, Win-Gate has entered
into two non-binding letters of intent with two different entities if each of
the parties agree and the transactions close, Win-Gate will issue additional
Common Stock as part of the proposed transactions.
An Overview of Our Common Stock
The following summarizes the rights of holders of our Common Stock:
o Each holder of shares of Common Stock is entitled to one vote per share
on all matters to be voted on by our Shareholders generally, including the
election of directors;
o There are no cumulative voting rights;
o The holders of our Common Stock are entitled to dividends and other
distributions as may be declared from time to time by the Board of
Directors out of funds legally available for that purpose, if any;
o upon our liquidation, dissolution or winding up, the holders of shares
of Common Stock will be entitled to share ratably in the distribution of
all of our assets remaining available for distribution after satisfaction
of all our liabilities and the payment of the liquidation preference of
any outstanding preferred stock; and
o The holders of Common Stock have no preemptive or other subscription
rights to purchase shares of our stock, and are not entitled to the
benefits of any redemption or sinking fund provisions.
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<PAGE>
An Overview of Our Preferred Stock
Our Articles of Incorporation authorize our Board of Directors to create and
issue one or more series of preferred stock and determine the rights and
preferences of each series within the limits set forth in our Articles of
Incorporation and applicable law. Among other rights, without further vote or
action by our shareholders, the Board of Directors may determine:
o The number of shares constituting the series and the distinctive
designation of the series;
o The dividend rate on the shares of the series, whether dividends will be
cumulative, and if so, from which date or dates, and the relative rights
of priority, if any, of payment of dividends on shares of the series;
o Whether the series will have voting rights in addition to the voting
rights provided by law and, if so, the terms of the voting rights;
o Whether the series will have conversion privileges and, if so, the terms
and conditions of conversion;
o Whether or not the shares of the series will be redeemable or
exchangeable, and, if so, the dates, terms and conditions of redemption or
exchange, as the case may be;
o Whether the series will have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of the
sinking fund; and
o The rights and liquidation value of the shares of the series in the
event of our voluntary or involuntary liquidation, dissolution or winding
up and the relative rights or priority, if any, of payment of shares of
the series.
Unless our Board of Directors provides otherwise, the shares of all series of
Preferred Stock will rank on a parity with respect to the payment of dividends
and to the distribution of assets upon liquidation. We have no present intent to
issue any additional series of Preferred Stock.
What are the Effects on Win-Gate Shareholders With Regard to this Amendment
Change?
It will not be necessary for you to surrender your share certificates upon
approval of the proposed increase in the number of authorized shares. Rather,
when share certificates are presented for transfer or other reasons, new share
certificates bearing the new amount of authorized shares will be set on the
certificates.
What Does Our Board of Directors Recommend?
OUR BOARD OF DIRECTORS HAS RECOMMENDED A VOTE "FOR" INCREASING OUR
AUTHORIZED SHARES OF COMMON STOCK TO 100,000,000 SHARES AND OUR PREFERRED
STOCK TO 20,000,000 SHARES.
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PROPOSAL NO. 4
TO ADOPT THE 2000 WIN-GATE STOCK INCENTIVE PLAN
Why has Our Board of Directors Recommended that the Shareholders Adopt the Plan?
Our Board of Directors believes that the proposed 2000 Win-Gate Stock Incentive
Plan (the "Plan") satisfies Win-Gate's objective of enhancing our profitability
and value for the benefit of our shareholders by enabling us to offer eligible
employees, consultants and non-employee directors of Win-Gate and its affiliates
stock-based incentives in Win-Gate. We believe that this will help to create a
means to raise the level of stock ownership by these individuals in order to
attract, retain and reward such individuals and strengthen the mutuality of
interests between such individuals and our shareholders.
Effective October 2, 2000 the Board of Directors adopted the 2000 Win-Gate Stock
Incentive Plan (the "Plan") and effective as of November 17, 2000 the Consenting
Shareholders will have approved the Plan.
The key provisions of the Plan are summarized below. The complete text of the
Plan is attached to this Proxy Statement as Appendix B. Please refer to the
Appendix for a complete statement of the Plan's provisions.
How Many Shares of Common Stock Will Be Available under the Plan?
Under the Plan, we may grant non-qualified stock options ("NQSOs") and incentive
stock options ("ISOs") to purchase shares of Common Stock, and restricted stock
(collectively, the "Awards"). The aggregate maximum number of shares for which
Awards may be issued under the Plan will be 3,000,000 shares of Win-Gate Common
Stock. The Plan does provide for equitable adjustment of the number of shares
subject to the Plan and the number of shares of each subsequent award of stock
and of the unexercised portion of the stock option award described below in the
event of a change in the capitalization of Win-Gate due to a stock split, stock
dividend recapitalization, merger or similar event. Other than with regard to
ISOs the number of shares that may be delivered under the Plan will be
determined after giving effect to the use by a participant of the right, if
granted, to cause Win-Gate to withhold from the shares of common stock otherwise
deliverable to him or her upon the exercise of an Award for shares of Common
Stock in payment of all or a portion of his or her withholding obligation
arising from such exercise.
Who Will Currently Be Our Plan Administrators and What Will the Plan
Administrators Do?
The authority to control and manage the operation and administration of the Plan
is vested in a Committee appointed by the Board of Directors from time to time.
The Committee will consist of the members of our Board of Directors.
The Committee has discretion
o to determine the types, terms and conditions of all Awards, including
- exercise price or purchase price (if any),
- performance goals, and
- other earn-out and/or vesting contingencies and acceleration
provisions,
o to adopt, alter or repeal administrative rules, guidelines and practices
(including special guidelines for non-U.S. employees),
o to delegate administrative responsibilities,
o to construe and interpret the terms of the Plan and any agreements
evidencing Awards granted.
Who is Eligible to Participate in the Plan?
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The Committee, in its sole discretion, may grant stock options and restricted
stock to employees and consultants of Win-Gate, its subsidiary corporations or
parent corporations. Participants will be selected on the basis of demonstrated
ability to contribute substantially to Win-Gate. Our Board has authority to
grant stock options to non-employee directors according to the Plan. All awards
are subject to the terms of a written agreement between the participant and
Win-Gate.
When Will the Plan Be Effective?
We expect that the Plan will be effective on or about November 17, 2000.
What Types of Awards May be Granted Under the Plan?
The awards granted under the Plan may be either ISOs, NQSOs or restricted stock
awards. The maximum number of shares of Common Stock subject to any award of
stock options or shares of Restricted Stock during any fiscal year is 1,000,000.
The vesting schedule for any option granted under the Plan, will be determined
by the Board of Directors or the Committee and will be set forth in a specific
option agreement. To the extent not exercised, installments will accumulate and
be exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the option expires. The Committee has the right to
accelerate the exercisability of any option.
--ISOs
Stock options qualify as ISOs if they meet the requirements of Section 422 of
the Internal Revenue Code. ISOs may only be granted to employees of Win-Gate and
its affiliates and any person holding capital stock of Win-Gate or any affiliate
possessing more than 10% of the total combined voting power of all classes of
capital stock of Win-Gate or any affiliate will not be eligible to receive ISOs
unless the exercise price per share is at least 110% of the fair market value of
the stock on the date the option is granted. Each ISO granted pursuant to the
Plan is exercisable, during the optionee's lifetime, only by the optionee or the
optionee's guardian or legal representative.
--NQSOs
NQSOs may be granted to employees, to directors who are neither officers nor
employees of our company, to consultants and to other persons who provide
services to us and our affiliates. Stock options are NQSOs if they do not meet
the requirements for ISOs.
--Restricted Stock
The Committee may grant shares of restricted stock, which is an award of shares
of common stock that is subject to the attainment of pre-established performance
goals and other conditions, restrictions and contingencies as the Committee
determines. Awards of restricted stock may be granted solely to participants who
are employees or consultants of Win-Gate, or any of its subsidiaries or parent
corporations. Unless otherwise determined by the Committee at grant , each award
of restricted Stock will provide that if the participant engages in detrimental
activities (as defined in the Plan) prior to, or during the one year period
after, any vesting of restricted Stock, the Committee may direct (at any times
within two years thereafter) that all unvested Restricted Stock be immediately
forfeited to Win-Gate and that the participant will pay Win-Gate an amount equal
to the fair market value at the time of vesting of any restricted stock that has
vested in the period referred to above. (This does not apply upon a Change of
Control). The purchase price of the Restricted Stock will be fixed by the
Committee.
Awards of restricted stock must be accepted within 90 days (or such shorter
period as the Committee may specify at grant) after the Award date by executing
a Restricted Stock Award agreement and paying whatever price (if any) the
Committee designates. Additionally, recipients of restricted stock are required
to enter into a restricted stock agreement which states the restrictions to
which the shares are subject and the criteria or date or dates on which such
restrictions
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will lapse. Within these limits, based on service, attainment of objective
performance goals, and such other factors as the Committee may determine in its
sole discretion, the Committee may provide for the lapse of such restrictions or
may accelerate or waive such restrictions at any time. A participant who
receives an Award of restricted stock shall not have any rights with respect to
such award of restricted stock, unless and until such participant has delivered
a fully executed copy of a restricted stock award agreement and has otherwise
complied with the applicable terms and conditions of such Award.
Awards of restricted stock may be intended to satisfy Section 162(m) of the
Code. Under the Plan, an Award of restricted stock may be conditioned upon or
subject to the attainment of performance goals. These performance goals will be
based on one or more of the objective criteria with regard to Win-Gate (or any
subsidiary corporation, parent corporation, division, or other operational unit
of Win-Gate) as described in the Plan.
What is the Term of the Stock Options?
All options will lapse on the expiration of the option terms specified by the
Committee in a certificate evidencing such option, but in no event will NQSOs or
ISOs be exercisable after the expiration of 10 years from the date such option
is granted (five years for participants who own more than 10% of the total
combined voting power of all classes of the stock of Win-Gate, its subsidiary
corporations or its parent corporations).
Generally, What is the Exercise Price for Stock Options?
The exercise price per share of Common Stock subject to an ISO or a Stock Option
intended to be "performance-based" for purposes of Section 162(m) of the Code
shall be determined by the Committee at the time of grant but shall not be less
than 100% of the fair market value of the shares of Common Stock at the time of
grant. However, if an ISO is granted to a 10% Shareholder, the exercise price
shall be no less than 110% of the fair market value of the Common Stock. The
exercise price per share of Common Stock subject to a NQSO will be determined by
the Committee.
What is the Maximum Grant?
To the extent that the aggregate fair market value (determined as of the time of
grant) of the Common Stock with respect to which ISOs are exercisable for the
first time by an employee during any calendar year under this Plan and/or any
other stock option plan of Win-Gate or any of its subsidiary or parent
corporations exceeds $100,000, such options shall be treated as NQSOs. In
addition, if an employee does not remain employed by Win-Gate, or any of its
subsidiary or parent corporations at all times from the time an ISO is granted
until three months prior to the date of exercise (or such other period as
required by applicable law), such option shall be treated as a NQSO. Should any
provision of this Plan not be necessary in order for the Stock Options to
qualify as ISOs, or should any additional provisions be required, the Committee
may amend this Plan accordingly, without the necessity of obtaining the approval
of Win-Gate shareholders.
How Does An Optionholder Pay for the Shares Underlying the Options to be
Exercised?
Payment of the purchase price is by (i) cash, (ii) check, or (iii) such other
consideration as the Plan Administrators, in their sole discretion, determine
and is consistent with the Plan's purpose and applicable law, or (iv) any
combination of the foregoing.
What Rights Does the Recipient of a Restricted Stock Award Have?
Upon the award of Restricted Stock, the recipient has all rights of a
shareholder with respect to the shares, including, without limitation, the right
to receive dividends, the right to vote those shares and, subject to and
conditioned upon the full vesting of the shares of restricted stock, the right
to tender those shares.
Do Optionees Under the Plan Have Shareholder Rights?
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Optionees do not have shareholder rights (e.g., right to vote and receive
dividends) until they exercise their options and receive shares of Common Stock.
When Do the Stock Options Under the Plan Expire?
Each stock option expires and is no longer exercisable on the dates that the
Plan administrators determine when the options are granted. Stock options can
also be terminated under certain circumstances following a "Change of Control".
What Happens to the Options Under the Plan Upon a Change of Control?
According to our Plan, a "Change of Control" occurs if
o We are dissolved or liquidated,
o We reorganize, merge or consolidate with one or more corporations where
we are not the surviving entity,
o W liquidate or sell all of substantially all of our assets ro a person
who owns at least 50% or more of the combined voting power of our
outstanding voting securities, or
o If a person becomes the beneficial owner of 50% or more of the combined
voting power of our then outstanding securities (provided that if any
person becomes the beneficial owner of such securities but does become
entitled to the voting power of those securities, it does not constitute a
Change of Control).
Upon a Change of Control, the Plan and any outstanding options will terminate
unless we provide for the Plan to be assumed and continued with our options
either assumed or replaced with substitute options covering the shares of a
successor corporation. If no provision is made for Plan continuation, we will
give all option holders advance written notice of the Change of Control, all
options will become fully exercisable and the option holders will then have 30
days to exercise their options.
What Happens Under the Plan if There is a Change in Our Corporate Structure?
If our corporate structure changes or if our shares change (i.e., if we
recapitalize, our stock splits, we consolidate, we undertake a rights offering,
or we issue a stock dividend), our Plan Administrators will make appropriate
adjustments to the number or class of shares which may be distributed under the
Plan and the option price or other price of shares subject to the outstanding
awards under the Plan in order to maintain the purpose of the original grant.
What about Grants to Non-Employee Directors?
Non-employee directors receive options to purchase 50,000 shares of Common Stock
as of the date the non-employee Directors begins serving in that capacity. The
exercise price for each option is the then fair market value of our Common Stock
at the time of grant, exercisable for 10 years, 50% pf which vest on the date of
grant and 50% vest on the first anniversary of the date of grant.
What are the Federal Income Tax Aspects of the Stock Options?
The following discussion of the federal income tax consequences of the granting
and exercise of stock options under the Plan, and the sale of Common Stock
acquired as a result thereof is based on an analysis of the Internal Revenue
Code of 1986, as amended (the "Code"), existing laws, judicial decisions, and
administrative rulings and regulations, all of which are subject to change. In
addition to being subject to the federal income tax consequences described
below, a participant may also be subject to state, local, estate and gift tax
consequences, none of which is described below. This discussion is limited to
the U.S. federal income tax consequences to individuals, who are citizens or
residents of the United States, other than those individuals who are taxed on a
residence basis in a foreign country.
19
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--ISOs.
Neither the grant nor, provided the holding periods described below are
satisfied, the exercise of an ISO will result in taxable income, to a
participant or a tax deduction for Win-Gate. However, for purposes of the
alternative minimum tax, the excess of the fair market value of the shares
acquired upon exercise of an ISO (determined at the time the option is
exercised) and the exercise price for such shares will be considered part of the
participant's income.
If the applicable holding periods described below are satisfied, the sale of
shares of common stock purchased upon the exercise of an ISO will result in
capital gain or loss to the participant and will not result in a tax deduction
to Win-Gate. To receive the foregoing ISO tax treatment as to the shares
acquired upon exercise of an ISO, a participant must hold such shares for at
least two years following the date the ISO is granted and for one year following
the date of the exercise of the ISO. In addition, a participant generally must
be an employee of Win-Gate (or a subsidiary corporation or parent corporation of
Win-Gate) at all times between the date of grant and the date three months
before exercise of the option.
If the holding period rules are not satisfied, the portion of any gain
recognized on the disposition of the shares acquired upon the exercise of an ISO
that is equal to the lesser of
o the fair market value of the shares on the date of exercise minus the
exercise price, or
o the amount realized on the disposition minus the exercise price,
will be treated as ordinary compensation income in the taxable year of the
disposition of the shares, with any remaining gain being treated as capital
gain. If the holding periods are not satisfied, Win-Gate will generally be
entitled to a tax deduction equal to the amount of such ordinary income included
in the participant's taxable income, subject to Section 162(m) of the Code.
--NQSOs.
No taxable income will be recognized by a participant at the time a NQSO is
granted to him or her.
Ordinary compensation income will be recognized by a participant at the time a
non-qualified stock option is exercised, and the amount of such income will be
equal to the excess of the fair market value on the exercise date of the shares
purchased by the optionee over the exercise price for such shares. Other than
with regard to non-employee directors, this ordinary compensation income will
also constitute wages subject to income tax withholding under the Code and
Win-Gate will require the participant to make suitable arrangements to ensure
that the participant remits to Win-Gate an amount sufficient to satisfy all tax
withholding requirements.
Win-Gate will generally be entitled to a deduction for federal income tax
purposes at such time and in the same amount as the amount includable in the
participant's ordinary income in connection with his or her exercise of a NQSO,
subject to Section 162(m) of the Code described herein.
Upon a participant's subsequent sale or other disposition of shares purchased on
exercise of a NQSO, the participant will recognize capital gain or loss (which
may be short-term or long-term depending upon the participant's holding period)
on the difference between the amount realized on such sale or other disposition
and the participant's tax basis in the shares sold. The tax basis of the shares
acquired upon the exercise of the option will be equal to the sum of the
exercise price for such shares and the amount includable in the participant's
income with respect to such exercise and acquisition of the shares.
--All Stock Options.
The following considerations may also apply to grants of NQSOs and/or ISOs:
20
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o Any officer and director of Win-Gate subject to Section 16(b) of the
Exchange Act may be subject to special tax rules regarding the income tax
consequences concerning their stock options,
o Any entitlement to a tax deduction on the part of Win-Gate is subject to
the applicable tax rules (including, without limitation, Section 162(m) of
the Code regarding a $1,000,000 limitation on deductible compensation),
and
o In the event that the exercisability or vesting of any stock option is
accelerated because of a change in control, payments relating to the stock
option (or a portion thereof), either alone or together with certain other
payments, may constitute parachute payments under Section 280G of the
Code, which excess amounts may be subject to excise taxes.
In general, Section 162(m) of the Code does not allow a publicly held
corporation like us, for federal income tax purposes, to deduct compensation in
excess of $1.0 million per year per person to its Chief Executive Officer and
the four other officers whose compensation is disclosed in its Proxy Statement
or Information Statement, as applicable, subject to specific exceptions. Our
Plan does not currently qualify for the exceptions and is therefore subject to
the limitations of Section 162(m) of the Code.
Are Awards Under the Plan Assignable?
Options may not be sold, assigned, transferred, pledged or encumbered, except by
will or by the laws of descent and distribution. An option may only be exercised
by the optionee during his or her lifetime or his or her estate, for a period of
time after the optionee's death.
How Can The Plan Be Amended or Terminated?
Generally, our Board of Directors or the Committee has the power to amend,
terminate or suspend all or any portion of the Plan without shareholder
approval. However, no amendment may impair an existing award or alter the rights
of a recipient of options already granted under the Plan without the recipient's
consent. Additionally, the Board of Directors may not, without further approval
of Win-Gate's shareholders, according to Florida Law, solely to the extent
required by the applicable provisions of Rule 16b-3, Section 162(m) or 422 of
the Code, or the rules of any applicable exchange:
o Increase the aggregate number of shares of Common Stock that may be
issued under this Plan,
o Increase the maximum individual Participant limitations for a fiscal
year,
o Change the classification of employees, Consultants or Non-Employee
Directors eligible to receive Awards under this Plan,
o Decrease the minimum option price of any Stock Option,
o Extend the maximum Stock Option period,
o Materially alter the Performance Criteria for the Award of Restricted
Stock, or
o Make any other amendment that would require shareholder approval under
the rules of any exchange or system on which Win-Gate's securities are
listed or traded.
Unless terminated by the Board of Directors earlier, the Plan shall terminate on
the earlier of December 31, 2012 or ten years after the date the Plan is
approved by Win-Gate's stockholders.
What is the Market Value of the Underlying Securities?
21
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On October 16, 2000 the closing bid price for Win-Gate's Common Stock on the OTC
Electronic Bulletin Board was $________.
How Many Awards Have Been Granted, Subject to Shareholder Approval?
As of October 16, 2000, options for the purchase of 985,000 shares were
outstanding by two employees.
What are the Effects on Win-Gate Shareholders With Regard to the Plan?
Adopting the Plan will have no direct effect on our Shareholders. However, when
options granted under the Plan are exercised, it will have a dilutive effect on
our Shareholders.
What Does Our Board of Directors Recommend?
OUR BOARD OF DIRECTORS HAS RECOMMENDED A VOTE "FOR" ADOPTING AND RATIFYING
THE 2000 WIN-GATE STOCK INCENTIVE PLAN.
PROPOSAL NO. 5
TO RATIFY OUR APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Our Board of Directors has selected Grant Thornton LLP to serve as our
independent Certified Public Accountants for the fiscal year ending March 31,
2001 and recommends to that our Shareholders vote for to ratify their
appointment. Grant Thornton representatives are expected to be available by
telephone at the Annual Shareholders Meeting and we expect that they will be
available to respond to appropriate questions.
Effective May 28, 1999, Win-Gate replaced Millward & Co., with London Witte &
Company, P.A., as its independent auditors when Millward & Co., Inc. declined to
stand for re-election or appointment. Millward & Co.'s report on the financial
statements since Win-Gate's inception did not contain any adverse opinion, any
disclaimer of opinion, nor has any opinion been modified as to uncertainty,
audit scope or accounting principles.
During Win-Gate's two fiscal years and subsequent interim periods preceding the
change in independent auditors, the Company had no disagreements with Millward &
Co. on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
On January 21, 2000, Win-Gate entered into and consummated a Stock Purchase
agreement with all of the stockholders of Globaltron Communications Corporation
("Globaltron") whereby Win-Gate acquired all of the issued and outstanding
shares of Globaltron and Globaltron became a wholly-owned subsidiary of the
Company. For financial accounting purposes, Globaltron was deemed the surviving
entity.
London Witte & company, P.A. acted as Win-Gate's independent auditors prior to
the acquisition of Globaltron and ceased acting as such upon completing the
Company's Annual report on Form 10-KSB for the year ended December 31, 1999.
Grant Thornton LLP became Win-Gate's independent auditors on March 10, 2000. The
decision to engage Grant Thornton and to terminate its relationship with London
Witte subsequent to the Globaltron acquisition was recommended and approved by
Win-Gate's Board of Directors.
The report of London Witte on Win-Gate's financial statements for the past two
fiscal years ended December 31, 1998 and December 31, 1999 ("Prior Fiscal
Years"), respectively did not contain any adverse opinion or disclaimer of
opinion or was qualified or modified as to uncertainty, audit scope or
accounting principles. During the Prior Fiscal years and the interim period,
Win-Gate has had no disagreement with London Witte as to any mater of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
22
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Our Board of Directors approves appointing our auditors annually and
subsequently submits ratifying the selection of Grant Thornton as our
independent certified public accounts for the fiscal year ending March 31, 2001.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFYING THE
SELECTION OF GRANT THORNTON LLP AS OUR INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
OTHER BUSINESS
We know of no other business to be brought at the Annual Meeting.
OTHER MATTERS
Shareholder Proposals
Any of our Shareholders wishing to include proposals in the proxy material in
relation to the Annual Meeting of our Shareholders to be held in 2001 must
submit the same in writing so as to be received at our executive offices on or
before February 28, 2001. Such proposals must also meet the other requirements
of the rules of the SEC relating to Shareholders' proposals.
If notice of a Shareholder proposal that has not been submitted to be included
in our proxy statement is not received by us on or before September 10, 2000 or
such date which is 45 days before the date this proxy is mailed, the persons
named in the enclosed form of proxy will have discretionary authority to vote
all proxies with respect thereto in accordance with their best judgment. If
notice of the proposal is timely served, the persons named in the enclosed form
of proxy may not exercise their discretionary authority as to the proposal.
Other Information
We have included a copy of our Annual Report on Form 10-KSB/A for the Fiscal
Year Ended March 31, 2000, filed August 25, 2000, as amended August 28, 2000
with this Information Statement to all Shareholders of record on the Record Date
for the Annual Meeting. You may also obtain a copy of our Annual Report, and all
other reports electronically filed by us via the Internet, by accessing the
Securities and Exchange Commission's EDGAR website at
www.sec.gov/edaux/searches.html.
By Order Of the Board of Directors
GARY D. MORGAN, JR.
Chairman of the Board
Miami, Florida
October 26, 2000
23
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
Win-Gate has duly caused this Information Statement to be signed on its behalf
by the undersigned.
By Order of the Board of Directors
/s/ Gary D. Morgan
--------------------------------------------
Dated: __________, 2000 Gary D. Morgan, Chairman of the Board of
Directors of Win-Gate Equity Group, Inc.
24
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APPENDIX A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WIN-GATE EQUITY GROUP, INC.
Win-Gate Equity Group, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the Florida Business Corporation Act, does
hereby certify:
1. The current name of the corporation is Win-Gate Equity Group, Inc. The
date of filing of its Articles of Incorporation with the Secretary of State was
___________, 2000.
2. Article 1 of the Articles of Incorporation of the Corporation is hereby
amended in its entirety as follows:
The name of this Corporation shall be: GLOBALTRON CORPORATION
3. Article IV of the Articles of Incorporation of the Corporation is
hereby amended in its entirety as follows:
This Corporation is authorized to issue and have outstanding at any time
the maximum number of One Hundred Million (100,000,000) shares of Common
Stock having a par value of $.001 per share, and Twenty Million
(20,000,000) shares of Preferred Stock having a par value of $.001 per
share. Series of the Preferred Stock may be created and issued from time
to time, with such designations, preferences, conversion rights,
cumulative, relative, participating, optional or other rights, including
voting rights, qualifications, limitations or restrictions thereof as
shall be stated and expressed in the resolution or resolutions providing
for the creation and issuance of such series of Preferred Stock as adopted
by the Board of Directors pursuant to the authority in this paragraph
given.
4. The amendments to the Articles of Incorporation of the Corporation set
forth in the preceding paragraphs have been duly adopted in accordance with the
Florida Business Corporation Act, on October 2, 2000, the Board of Directors of
the Corporation having adopted resolutions setting forth such amendments,
declaring their advisability, and directing that it be submitted to the
shareholders of the Corporation for their approval; and that on November 17,
2000, the holders of outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voting having
consented in writing to adopting such amendments.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this
Amendment on the _____ day of _______, 2000.
WIN-GATE EQUITY GROUP, INC.
By: ___________________________________
Title: ________________________________
<PAGE>
APPENDIX B
--------------------------
WIN-GATE EQUITY GROUP, INC.
STOCK INCENTIVE PLAN
--------------------------
<PAGE>
SECTION I.
PURPOSE
The purpose of this Win-Gate Equity Group, Inc. Stock Incentive Plan is to
enhance the Company's profitability and value for the benefit of its
shareholders by enabling the Company to offer Eligible Employees, Consultants
and Non-Employee Directors of the Company and its Affiliates stock-based
incentives in the Company, thereby creating a means to raise the level of stock
ownership by such individuals in order to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company's shareholders.
SECTION II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Acquisition Events" has the meaning set forth in Section 4.2(d).
2.2 "Affiliate" means each of the following: (a) any Subsidiary; (b) any
Parent; (c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company or one of its Affiliates;
and (d) any other entity in which the Company or any of its Affiliates has a
material equity interest and which is designated as an "Affiliate" by resolution
of the Committee.
2.3 "Award" means any award under this Plan of a Stock Option or
Restricted Stock.
2.4 "Board" means the Company's Board of Directors.
2.5 "Cause" means, with respect to a Participant's Termination of
Employment or Termination of Consultancy: (a) in the case where there is no
employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define "cause" (or words of like import)), termination
due to a Participant's insubordination, dishonesty, fraud, incompetence, moral
turpitude, misconduct, violation of any proprietary rights agreement, engaging
in Detrimental Activity, refusal to perform his or her duties or
responsibilities for any reason other than illness or incapacity or materially
unsatisfactory performance of his or her duties for the Company or an Affiliate,
as determined by the Committee in its sole discretion; or (b) in the case where
there is an employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award that defines "cause" (or
words of like import), "cause" as defined under such agreement; provided,
however, that with regard to any agreement that conditions "cause" on occurrence
of a Change in Control, such definition of "cause" shall not apply until a
Change in Control actually takes place and then only with regard to a
termination thereafter.
<PAGE>
With respect to a Participant's Termination of Directorship, "cause" shall mean
an act or failure to act that constitutes cause for removal of a director under
applicable Delaware law.
2.6 "Change in Control" has the meaning set forth in Article IX.
2.7 "Change in Control Price"has the meaning set forth in Section 9.1(b).
2.8 "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision and any Treasury Regulations promulgated thereunder.
2.9 "Committee" means (a) with respect to the application of this Plan to
Eligible Employees and Consultants, a committee of the Board appointed from time
to time by the Board, which committee shall be intended to consist of two or
more Non-Employee Directors, each of whom shall be (i) to the extent required by
Rule 16b-3, a "non-employee director" as defined in Rule 16b-3 and (ii) to the
extent required by Section 162(m) of the Code, an "outside director" as defined
under Section 162(m) of the Code and (b) with respect to the application of this
Plan to Non-Employee Directors, the Board. Notwithstanding the foregoing, if and
to the extent that no Committee exists which has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board and all
references herein to the Committee shall be deemed to be references to the
Board. If for any reason the appointed Committee does not meet the requirements
of Rule 16b-3 or Section 162(m) of the Code, such noncompliance with the
requirements of Rule 16b-3 or Section 162(m) of the Code shall not affect the
validity of the Awards, grants, interpretations or other actions of the
Committee.
2.10 "Common Stock" means the Company's common stock, $.001 par value per
share, of the Company.
2.11 "Company" means Win-Gate Equity Group, Inc., a Florida corporation,
and its successors by operation of law.
2.12 "Consultant" means any Person who is an advisor or consultant to the
Company or its Affiliates.
2.13 "Detrimental Activity" means (a) the disclosure to anyone outside the
Company or its Affiliates, or the use in any manner other than in the
furtherance of the Company's or its Affiliate's business, without written
authorization from the Company, of any confidential information or proprietary
information, relating to the business of the Company or its Affiliates, acquired
by a Participant prior to the Participant's Termination; (b) activity while
employed or performing services that results, or if known could result, in the
Participant's Termination that is classified by the Company as a Termination for
Cause; (c) any attempt, directly or indirectly, to solicit, induce or hire (or
the identification for solicitation, inducement or hire) any non-clerical
employee of the Company or its Affiliates to be employed by, or to perform
services for, the Participant or any Person with which the Participant is
associated (including, but not limited to, due to the Participant's employment
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<PAGE>
by, consultancy for, equity interest in, or creditor relationship with such
Person) or any Person or entity from which the Participant receives direct or
indirect compensation or fees as a result of such solicitation, inducement or
hire (or the identification for solicitation, inducement or hire) without, in
all cases, written authorization from the Company; (d) any attempt, directly or
indirectly, to solicit in a competitive manner any current or prospective
customer of the Company or its Affiliates without, in all cases, written
authorization from the Company; (e) the Participant's Disparagement, or
inducement of others to do so, of the Company or its Affiliates or their past
and present officers, directors, employees or products; (f) without written
authorization from the Company, the rendering of services for any organization,
or engaging, directly or indirectly, in any business, which is competitive with
the Company or its Affiliates, or which organization or business, or the
rendering of services to such organization or business, is otherwise prejudicial
to or in conflict with the interests of the Company or its Affiliates, or (g)
any other conduct or act determined by the Committee, in its sole discretion, to
be injurious, detrimental or prejudicial to any interest of the Company or its
Affiliates. Unless otherwise determined by the Committee at grant, Detrimental
Activity shall not be deemed to occur after the end of the one year period
following the Participant's Termination. For purposes of subparagraphs (a), (c),
(c) and (f) above, the Chief Executive Officer and the General Counsel of the
Company shall each have authority to provide the Participant with written
authorization to engage in the activities contemplated thereby and no other
person shall have authority to provide the Participant with such authorization.
2.14 "Disability" means with respect to a Participant's Termination, (a)
in the case where there is no employment agreement, consulting agreement, change
in control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award (or where
there is such an agreement but it does not define "disability" (or words of like
import), total and permanent disability, as defined in Section 22(e)(3) of the
Code, as determined by the Committee in its sole discretion; or (b) in the case
where there is an employment agreement, consulting agreement, change in control
agreement or other similar agreement between the Company or an Affiliate and the
Participant at the time of the grant of the Award that defines "disability" (or
words of like import), disability as defined under such agreement at the time of
the grant of the Award, as determined by the Committee in its sole discretion. A
Disability shall only be deemed to occur at the time of the determination by the
Committee of the Disability.
2.15 "Disparagement" means making comments, whether orally or in writing,
or statements to the press, employees, consultants, vendors or customers of the
Company or those of its Affiliates or to any other Person which is negative in
nature or which could adversely affect: (a) the conduct of the business of the
Company or its Affiliates (including, without limitation, any products, services
or business plans or prospects), or (b) the reputation or quality of the
products or services of the Company or its Affiliates, or those of any of their
employees, consultants, shareholders, directors or officers, past or present, or
the manner in which any of them conducts their respective businesses.
2.16 "Effective Date" means the effective date of this Plan as defined in
Section XIV.
2.17 "Eligible Employee" means each employee of the Company or an
Affiliate.
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<PAGE>
2.18 "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.
2.19 "Fair Market Value" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any Treasury
Regulations promulgated thereunder, as of any date, the last closing price
reported for the Common Stock on the applicable date: 1. as reported by the
principal national securities exchange in the United States on which it is then
traded or The Nasdaq Stock Market, Inc. or 2. if not traded on any such national
securities exchange or The Nasdaq Stock Market, Inc. as quoted on an automated
quotation system sponsored by the National Association of Securities Dealers,
Inc. or if the Common Stock shall not have been reported or quoted on such date,
on the first day prior thereto on which the Common Stock was reported or quoted;
provided, that the Committee may modify the definition of Fair Market Value to
reflect any changes in the trading practices of any exchange on which the Common
Stock is listed or traded. If the Common Stock is not readily tradable on a
national securities exchange, The Nasdaq Stock Market, Inc. or any automated
quotation system sponsored by the National Association of Securities Dealers,
Inc., its Fair Market Value shall be set in good faith by the Committee.
Notwithstanding anything herein to the contrary, for purposes of granting
Incentive Stock Options, "Fair Market Value" means the price for Common Stock
set by the Committee in good faith based on reasonable methods set forth under
Section 422 of the Code and the Treasury Regulations promulgated thereunder
including, without limitation, a method utilizing the average of prices of the
Common Stock reported on the principal national securities exchange on which it
is then traded during a reasonable period designated by the Committee. For
purposes of the grant of any Stock Option, the applicable date shall be the date
for which the last sales price is available at the time of grant.
2.20 "Family Member" means, solely to the extent provided for in
Securities Act Form S-8, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the employee's household
(other than a tenant or employee), a trust in which these persons have more than
50% of the beneficial interest, a foundation in which these persons (or the
employee) control the management of assets, and any other entity in which these
persons (or the employee) own more than 50% of the voting interests or as
otherwise defined in Securities Act Form S-8.
2.21 "Incentive Stock Option" means any Stock Option awarded to an
Eligible Employee under this Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.
2.22 "Non-Employee Director" means a member of the Board of the Company
who is not an active employee of the Company or an Affiliate.
2.23 "Non-Qualified Stock Option" means any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
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<PAGE>
2.24 "Parent" means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.
2.25 "Participant" means any Eligible Employee, Consultant or
Non-Employee Director to whom an Award has been granted under this Plan;
provided, however, that a Non-Employee Director shall be a Participant for
purposes of the Plan solely with respect to awards of Stock Options pursuant to
Section XI.
2.26 "Performance Criteria" has the meaning set forth in Exhibit A.
2.27 "Performance Goal" means the objective performance goals
established by the Committee in accordance with Section 162(m) of the Code and
based on one or more Performance Criteria.
2.28 "Person" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint-stock
company, trust, incorporated organization, governmental or regulatory or other
entity.
2.29 "Plan" means this 2000 Win-Gate Equity Group, Inc. Stock
Incentive Plan, as amended from time to time.
2.30 "Restricted Stock" means an Award of shares of Common Stock
under this Plan that is subject to the restrictions under Section VII.
2.31 "Restriction Period" has the meaning set forth in Section 7.3
with respect to Restricted Stock.
2.32 "Retirement" means a Termination of Employment or Termination
of Consultancy without Cause by a Participant on or after age 65 or such earlier
date after age 50 as may be approved by the Committee with regard to such
Participant. With respect to a Participant's Termination of Directorship,
Retirement means the failure to stand for reelection or the failure to be
reelected at or after a Participant has attained age 65 or, with the consent of
the Board, before age 65 but after age 50.
2.33 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.
2.34 "Section 162(m) of the Code" means the exception for
performance-based compensation under Section 162(m) of the Code and any Treasury
Regulations promulgated thereunder.
2.35 "Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder. Any reference to any
section of the Securities Act shall also be a reference to any successor
provision.
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<PAGE>
2.36 "Stock Option" or "Option" means any option to purchase shares
of Common Stock granted to Eligible Employees or Consultants under Section VI or
to Non-Employee Directors under Section XI.
2.37 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.38 "Ten Percent Shareholder" means a person owning stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.
2.39 "Termination" means a Termination of Consultancy, Termination
of Directorship or Termination of Employment, as the case may be.
2.40 "Termination of Consultancy" means (a) that the Consultant is
no longer acting as a consultant to the Company or an Affiliate; or (b) when an
entity which is retaining a Participant as a Consultant ceases to be an
Affiliate unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to
be an Affiliate. In the event that a Consultant becomes an Eligible Employee or
a Non-Employee Director upon the termination of his consultancy, unless
otherwise determined by the Committee, in its sole discretion, may determine
that no Termination of Consultancy shall be deemed to occur until such time as
such Consultant is no longer a Consultant, an Eligible Employee or a
Non-Employee Director. Notwithstanding the foregoing, the Committee may
otherwise define Termination of Consultancy in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.
2.41 "Termination of Directorship" means that the Non-Employee
Director has ceased to be a director of the Company; except that if a
Non-Employee Director becomes an Eligible Employee or a Consultant upon the
termination of his directorship, the date he ceased to be a director of the
Company and becomes an Eligible Employee or Consultant shall not be treated as a
Termination of Directorship unless and until the Participant has a Termination
of Employment or Termination of Consultancy, as the case may be.
2.42 "Termination of Employment" means: (a) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its Affiliates; or
(b) when an entity which is employing a Participant ceases to be an Affiliate,
unless the Participant otherwise is, or thereupon becomes, employed by the
Company or another Affiliate at the time the entity ceases to be an Affiliate.
In the event that an Eligible Employee becomes a Consultant or Non-Employee
Director upon the termination of his employment, the Committee, in its sole
discretion, may determine that no Termination of Employment shall be deemed to
occur until such time as such Eligible Employee is no longer an Eligible
Employee, a Consultant or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may otherwise define Termination of Employment in the
Award agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Employment thereafter.
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2.43 "Transfer" means (a) when used as a noun, any direct or
indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition (including the issuance of equity in a Person), whether for value or
no value and whether voluntary or involuntary (including by operation of law),
and (b) when used as a verb, to directly or indirectly transfer, sell, assign,
pledge, hypothecate, encumber, or otherwise dispose of (including the issuance
of equity in a Person), whether for value or no value and whether voluntarily or
involuntarily (including by operation of law. "Transferred", "Tranferrable" and
"Transferability" shall have a correlative meaning.
SECTION III.
ADMINISTRATION
3.1 Committee. The Plan shall be administered and interpreted by the
Committee.
3.2 Grants of Awards. The Committee shall have full authority to
grant Stock Options and Restricted Stock to Eligible Employees and Consultants
and the Board shall have full authority to grant Stock Options to Non-Employee
Directors pursuant to the terms of this Plan. All Awards shall be granted by,
confirmed by, and subject to the terms of, a written agreement executed by the
Company and the Participant. In particular, the Committee (and, the Board, with
respect to Non-Employee Directors) shall have the authority:
(a) to select the Eligible Employees and Consultants to whom
Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Awards, or any
combination thereof, are to be granted hereunder to one or more Eligible
Employees or Consultants;
(c) to determine, in accordance with the terms of this Plan,
the number of shares of Common Stock to be covered by each Award granted
hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of this Plan, of any Award granted hereunder (including,
but not limited to, the exercise or purchase price (if any), any
restriction or limitation, any vesting schedule or acceleration thereof
and any forfeiture restrictions or waiver thereof, regarding any Award and
the shares of Common Stock relating thereto, based on such factors, if
any, as the Committee shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash, Common Stock and/or Restricted Stock under
Section 6.3(d) or, with respect to Stock Options granted to Non-Employee
Directors, under Section 11.3(d);
(f) to determine whether, to what extent and under what
circumstances to provide loans (which shall be on a recourse basis and
bear interest at the rate the Committee shall
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provide) to Eligible Employees and Consultants in order to exercise Stock
Options or to purchase Awards under this Plan (including shares of Common
Stock);
(g) to determine whether a Stock Option is an Incentive
Stock Option or Non-Qualified Stock Option or whether an Award is intended
to satisfy Section 162(m) of the Code;
(h) to determine whether to require an Eligible Employee
or Consultant, as a condition of the granting of any Award, not to sell or
otherwise dispose of shares of Common Stock acquired pursuant to the
exercise of an Option or vesting of an Award for a period of time as
determined by the Committee, in its sole discretion, following the date of
the acquisition of such Option or Award;
(i) to modify, extend or renew an Award, subject to
Section X herein, provided, however, that if an Award is modified,
extended or renewed and thereby deemed to be the issuance of a new Award
under the Code or the applicable accounting rules, the exercise price of
an Award may continue to be the original exercise price even if less than
the Fair Market Value of the Common Stock at the time of such
modification, extension or renewal; and
(j) to offer to buy out an Option previously granted,
based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time such offer is made.
3.3 Guidelines. Subject to Section X hereof, the Committee shall
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret the terms and provisions of this
Plan and any Award issued under this Plan (and any agreements relating thereto);
and to otherwise supervise the administration of this Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any Award agreement relating thereto in the manner and to the extent
it shall deem necessary to effectuate the purpose and intent of this Plan. The
Committee may adopt special guidelines and provisions for persons who are
residing in or employed in, or subject to, the taxes of, foreign jurisdictions
to comply with applicable tax and securities laws and may impose any limitations
and restrictions that it deems necessary to comply with the applicable tax and
securities laws of such foreign jurisdictions. To the extent applicable, this
Plan is intended to comply with the applicable requirements of Rule 16b-3 and
with regard to Options and certain other Awards, the applicable provisions of
Section 162(m) of the Code and shall be limited, construed and interpreted in a
manner so as to comply therewith.
3.4 Decisions Final. Any decision, interpretation or other action
made or taken in good faith by or at the direction of the Company, the Board or
the Committee (or any of its members) arising out of or in connection with this
Plan shall be within the sole discretion of all and each of them, as the case
may be, and shall be final, binding and conclusive on the Company and all
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employees and Participants and their respective heirs, executors,
administrators, successors and assigns.
3.5 Procedures. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times and
places as it shall deem advisable, including, without limitation, by telephone
conference or by written consent to the extent permitted by applicable law. A
majority of the Committee members shall constitute a quorum. All determinations
of the Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by all the Committee members in
accordance with the By-Laws of the Company, shall be fully as effective as if it
had been made by a vote at a meeting duly called and held. The Committee shall
keep minutes of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.
3.6 Designation of Consultants/Liability.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of
this Plan and may grant authority to officers to execute agreements or
other documents on behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of this Plan
and may rely upon any opinion received from any such counsel or consultant
and any computation received from any such consultant or agent. Expenses
incurred by the Committee or the Board in the engagement of any such
counsel, consultant or agent shall be paid by the Company. The Committee,
its members and any person designated pursuant to paragraph (a) above
shall not be liable for any action or determination made in good faith
with respect to this Plan. To the maximum extent permitted by applicable
law, no officer of the Company or member or former member of the Committee
or of the Board shall be liable for any action or determination made in
good faith with respect to this Plan or any Award granted under it.
3.7 Indemnification. To the maximum extent permitted by applicable
law and the Certificate of Incorporation and By-Laws of the Company and to the
extent not covered by insurance directly insuring such person or any independent
contractual right of indemnification, each officer or former officer and member
or former member of the Committee or the Board shall be indemnified and held
harmless by the Company against any cost or expense (including reasonable fees
of counsel reasonably acceptable to the Company) or liability (including any sum
paid in settlement of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and to the fullest
extent permitted, arising out of any act or omission to act in connection with
the administration of this Plan, except to the extent arising out of such
officer's, former officer's, member's, or former member's own fraud or bad
faith. Such indemnification shall be in addition to any rights of
indemnification the employees, officers, directors or members or former
officers, directors or members may have under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or any Affiliate.
Notwithstanding anything else herein,
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this indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan.
SECTION IV.
SHARE AND OTHER LIMITATIONS
4.1 Shares.
(a) General Limitation. The aggregate number of shares of
Common Stock which may be issued or used for reference purposes under this
Plan or with respect to which Awards may be granted under this Plan shall
not shall not exceed 3,000,0000 shares of Common Stock (subject to any
increase or decrease pursuant to Section 4.2) with respect to Awards. The
shares of Common Stock available under this Plan may be either authorized
and unissued Common Stock or Common Stock held in or acquired for the
treasury of the Company or both. If any Stock Option granted under this
Plan expires, terminates or is canceled for any reason without having been
exercised in full or the Company repurchases any Stock Option, the number
of shares of Common Stock underlying such unexercised or repurchased Stock
Option shall again be available for the purposes of Awards under this
Plan. If any shares of Restricted Stock awarded under this Plan to a
Participant are forfeited, repurchased, terminated or canceled by the
Company for any reason the number of forfeited, repurchased, terminated or
canceled shares of Restricted Stock shall again be available for the
purposes of Awards under this Plan. In addition, in determining the number
of shares of Common Stock available for Awards other than Awards of
Incentive Stock Options, if Common Stock has been delivered or exchanged
by a Participant as full or partial payment to the Company for payment of
the exercise price, or for payment of withholding taxes, or if the number
shares of Common Stock otherwise deliverable has been reduced for payment
of the exercise price or for payment of withholding taxes, the number of
shares of Common Stock exchanged as payment in connection with the
exercise or for withholding or reduced shall again be available for
purposes of Awards under this Plan.
(b) Individual Participant Limitations. The maximum number
of shares of Common Stock subject to any Award of Stock Options or shares
of Restricted Stock for which the grant of such Award or the lapse of the
relevant Restriction Period is subject to the attainment of Performance
Goals in accordance with Section 7.3 herein which may be granted under
this Plan during any fiscal year of the Company to each Eligible Employee
or Consultant shall be 1,000,000 shares per type of Award (subject to any
increase or decrease pursuant to Section 4.2).
1. There are no annual individual Eligible Employee or
Consultant share limitations on Restricted Stock for which the grant
of such Award or the lapse of the relevant Restriction Period is not
subject to attainment of Performance Goals in accordance with
Section 7.3(a)(ii) hereof.
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2. The individual Participant limitations set forth in this
Section 4.1(b) shall be cumulative; that is, to the extent that
shares of Common Stock for which Awards are permitted to be granted
to an Eligible Employee or a Consultant during a fiscal year are not
covered by an Award to such Eligible Employee or Consultant in a
fiscal year, the number of shares of Common Stock available for
Awards to such Eligible Employee or Consultant shall automatically
increase in the subsequent fiscal years during the term of the Plan
until used.
4.2 Changes.
(a) The existence of this Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or
the shareholders of the Company to make or authorize 1. any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, 2. any merger or consolidation of the Company
or any Affiliate, 3. any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting Common Stock, the dissolution or
liquidation of the Company or any Affiliate, 4. any sale or transfer of
all or part of the assets or business of the Company or any Affiliate or
any other corporate act or proceeding.
(b) Subject to the provisions of Section 4.2(d), in the event
of any such change in the capital structure or business of the Company by
reason of any stock split, reverse stock split, stock dividend,
combination or reclassification of shares, recapitalization, or other
change in the capital structure of the Company, merger, consolidation,
spin-off, reorganization, partial or complete liquidation, issuance of
rights or warrants to purchase any Common Stock or securities convertible
into Common Stock, any sale or transfer of all or part of the Company's
assets or business, or any other corporate transaction or event having an
effect similar to any of the foregoing and effected without receipt of
consideration by the Company, then the aggregate number and kind of shares
which thereafter may be issued under this Plan, the number and kind of
shares or other property (including cash) to be issued upon exercise of an
outstanding Stock Option or other Awards granted under this Plan and the
purchase price thereof shall be appropriately adjusted consistent with
such change in such manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available
for, Participants under this Plan, and any such adjustment determined by
the Committee in good faith shall be final, binding and conclusive on the
Company and all Participants and employees and their respective heirs,
executors, administrators, successors and assigns. Except as provided in
this Section 4.2, a Participant shall have no rights by reason of any
issuance by the Company of any class or securities convertible into stock
of any class, any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend, any other increase or decrease
in the number of shares of stock of any class, any sale or transfer of all
or part of the Company's assets or business or any other change affecting
the Company's capital structure or business.
(c) Fractional shares of Common Stock resulting from any
adjustment in Awards pursuant to Section 4.2(a) or (b) shall be aggregated
until, and eliminated at, the time of
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exercise by rounding-down for fractions less than one-half and rounding-up
for fractions equal to or greater than one-half. No cash settlements shall
be made with respect to fractional shares eliminated by rounding. Notice
of any adjustment shall be given by the Committee to each Participant
whose Award has been adjusted and such adjustment (whether or not such
notice is given) shall be effective and binding for all purposes of this
Plan.
(d) In the event of a merger or consolidation in which the
Company is not the surviving entity or in the event of any transaction
that results in the acquisition of substantially all of the Company's
outstanding Common Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of all or substantially all of the Company's assets (all of the
foregoing being referred to as "Acquisition Events"), then the Committee
may, in its sole discretion, terminate all outstanding Stock Options,
effective as of the date of the Acquisition Event, by delivering notice of
termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event, in which case during the period
from the date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant shall have
the right to exercise in full all of his or her Stock Options that are
then outstanding (without regard to any limitations on exercisability
otherwise contained in the Stock Option), but any such exercise shall be
contingent upon and subject to the occurrence of the Acquisition Event,
and, provided that, if the Acquisition Event does not take place within a
specified period after giving such notice for any reason whatsoever, the
notice and exercise pursuant thereto shall be null and void. If an
Acquisition Event occurs but the Committee does not terminate the
outstanding Stock Options pursuant to this Section 4.2(d), then the
provisions of Section 4.2(b) shall apply.
4.3 Minimum Purchase Price. Notwithstanding any provision of this
Plan to the contrary, if authorized but previously unissued shares of Common
Stock are issued under this Plan, such shares shall not be issued for a
consideration which is less than as permitted under applicable law.
SECTION V.
ELIGIBILITY
5.1 General Eligibility. All Eligible Employees and Consultants and
prospective employees of and Consultants to the Company and its Affiliates are
eligible to be granted Non-Qualified Stock Options and Restricted Stock.
Eligibility for Awards and actual participation in this Plan shall be determined
by the Committee in its sole discretion. The vesting and exercise of Awards
granted to a prospective employee or Consultant are conditioned upon such
individual actually becoming an Eligible Employee or Consultant.
5.2 Incentive Stock Options. All Eligible Employees of the Company,
its Subsidiaries and its Parent (if any) are eligible to be granted Incentive
Stock Options under this Plan. Eligibility
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for the grant of an Incentive Stock Option and actual participation in this Plan
shall be determined by the Committee in its sole discretion.
5.3 Non-Employee Directors. Non-Employee Directors are only eligible
to receive an Award of Stock Options in accordance with Article XI of the Plan.
SECTION VI.
STOCK OPTIONS
6.1 Stock Options. Each Stock Option granted hereunder shall be one
of two types: 1. an Incentive Stock Option intended to satisfy the requirements
of Section 422 of the Code; or 2. a Non-Qualified Stock Option.
6.2 Grants. Subject to the provisions of Section V, the Committee
shall have the authority to grant to any Eligible Employee one or more Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options.
Subject to the provisions of Section 6.3(e) below, to the extent that any Stock
Option does not qualify as an Incentive Stock Option (whether because of its
provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not qualify, shall constitute a
separate Non-Qualified Stock Option. The Committee shall have the authority to
grant any Consultant or Non-Employee Director one or more Non-Qualified Stock
Options. Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of a Stock Option to the
contrary, any Stock Option granted to an Eligible Employee of an Affiliate
(other than an Affiliate which is a Parent or a Subsidiary) shall be a
Non-Qualified Stock Option.
6.3 Terms of Stock Options. Stock Options granted under this Plan
shall be subject to the following terms and conditions, and shall be in such
form and contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem desirable:
(a) Exercise Price. The exercise price per share of Common
Stock subject to an Incentive Stock Option or a Stock Option intended to
be "performance-based" for purposes of Section 162(m) of the Code shall be
determined by the Committee at the time of grant but shall not be less
than 100% of the Fair Market Value of the share of Common Stock at the
time of grant; provided, however, that if an Incentive Stock Option is
granted to a Ten Percent Shareholder, the exercise price shall be no less
than 110% of the Fair Market Value of the Common Stock. The exercise price
per share of Common Stock subject to a Non-Qualified Stock Option shall be
determined by the Committee.
(b) Stock Option Term. The term of each Stock Option shall be
fixed by the Committee; provided, however, that no Stock Option shall be
exercisable more than ten years after the date such Stock Option is
granted; and further provided that the term of an Incentive Stock Option
granted to a Ten Percent Shareholder shall not exceed five years.
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(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee at grant. If the Committee provides, in its
discretion, that any Stock Option is exercisable subject to certain
limitations (including, without limitation, that such Stock Option is
exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at
or after grant in whole or in part (including, without limitation, waiver
of the installment exercise provisions or acceleration of the time at
which such Stock Option may be exercised), based on such factors, if any,
as the Committee shall determine, in its sole discretion.
Unless otherwise determined by the Committee at grant, the grant
shall provide that (i) in the event the Participant engages in Detrimental
Activity prior to any exercise of the Stock Option, all Stock Options held
by the Participant shall thereupon terminate and expire, (ii) as a
condition of the exercise of a Stock Option, the Participant shall be
required to certify at the time of exercise in a manner acceptable to the
Company that the Participant is in compliance with the terms and
conditions of the Plan and that the Participant has not engaged in, and
does not intend to engage in, any Detrimental Activity, (iii) in the event
the Participant engages in Detrimental Activity, the Company shall be
entitled to receive from the Participant at any time within one year after
such exercise, and the Participant shall pay over to the Company, an
amount equal to any gain realized as a result of the exercise (whether at
the time of exercise or thereafter). If, at any time, the provisions of
this paragraph shall be deemed unenforceable under applicable law, the
Stock Option shall be immediately canceled, retroactively or
prospectively. The foregoing provisions described in (i), (ii) and (iii)
shall cease to apply upon a Change in Control.
(d) Method of Exercise. Subject to whatever installment
exercise and waiting period and vesting provisions apply under
subparagraph (c) above, Stock Options may be exercised in whole or in part
at any time and from time to time during the Stock Option term by giving
written notice of exercise to the Committee specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in
full of the purchase price as follows: (i) in cash or by check, bank draft
or money order payable to the order of the Company; (ii) if the Common
Stock is traded on a national securities exchange, The Nasdaq Stock
Market, Inc. or quoted on a national quotation system sponsored by the
National Association of Securities Dealers, and the Committee authorizes,
through a "cashless exercise" procedure whereby the Participant delivers
irrevocable instructions to a broker approved by the Committee to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on
such other terms and conditions as may be acceptable to the Committee
(including, without limitation, the relinquishment of Stock Options or by
payment in full or in part in the form of Common Stock owned by the
Participant for a period of at least six months or such other period
necessary to avoid a charge, for accounting purposes, against the
Company's earnings as reported in the Company's financial statements (and
for which the Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common Stock on the
payment date as determined by the Committee). No shares of Common Stock
shall be issued until payment therefor, as
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provided herein, has been made or provided for and the conditions of
Section 13.5 are satisfied.
(e) Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an Eligible Employee during any calendar year under
this Plan and/or any other stock option plan of the Company, any
Subsidiary or any Parent exceeds $100,000, such Options shall be treated
as Non-Qualified Stock Options. In addition, if an Eligible Employee does
not remain employed by the Company, any Subsidiary or any Parent at all
times from the time an Incentive Stock Option is granted until three
months prior to the date of exercise thereof (or such other period as
required by applicable law), such Stock Option shall be treated as a
Non-Qualified Stock Option. Should any provision of this Plan not be
necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the Committee
may amend this Plan accordingly, without the necessity of obtaining the
approval of the shareholders of the Company.
(f) Form, Modification, Extension and Renewal of Stock
Options. Subject to the terms and conditions and within the limitations of
this Plan, Stock Options shall be evidenced by such form of agreement or
grant as is approved by the Committee, and the Committee may (i) modify,
extend or renew outstanding Stock Options granted under this Plan
(provided that the rights of a Participant are not reduced without his or
her consent), and (ii) accept the surrender of outstanding Stock Options
(up to the extent not theretofore exercised) and authorize the granting of
new Stock Options in substitution therefor (to the extent not theretofore
exercised). Notwithstanding the foregoing, an outstanding Stock Option may
not be modified to reduce the exercise price thereof nor may a new Stock
Option at a lower exercise price be substituted for a surrendered Stock
Option, provided that the foregoing shall not apply to adjustments or
substitutions made in accordance with Section 4.2 hereof.
(g) Deferred Delivery of Common Shares. The Committee may in
its discretion permit Participants to defer delivery of Common Stock
acquired pursuant to a Participant's exercise of an Option in accordance
with the terms and conditions established by the Committee.
(h) Early Exercise. The Committee may provide that a Stock
Option include a provision whereby the Participant may elect at any time
before the Participant's Termination to exercise the Stock Option as to
any part or all of the shares of Common Stock subject to the Stock Option
prior to the full vesting of the Stock Option and such shares shall be
subject to the provisions of Section VII and treated as Restricted Stock.
Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the
Committee determines to be appropriate.
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(i) Other Terms and Conditions. Stock Options may contain such
other provisions, which shall not be inconsistent with any of the terms of
this Plan, as the Committee shall deem appropriate including, without
limitation, permitting "reloads" such that the same number of Stock
Options are granted as the number of Stock Options exercised, shares used
to pay for the exercise price of Stock Options or shares used to pay
withholding taxes ("Reloads"). With respect to Reloads, the exercise price
of the new Stock Option shall be the Fair Market Value on the date of the
"reload" and the term of the Stock Option shall be the same as the
remaining term of the Stock Options that are exercised, if applicable, or
such other exercise price and term as determined by the Committee.
SECTION VII.
RESTRICTED STOCK
7.1 Awards of Restricted Stock. Shares of Restricted Stock may be
issued to Eligible Employees or Consultants either alone or in addition to other
Awards granted under this Plan. The Committee shall determine the eligible
persons to whom, and the time or times at which, grants of Restricted Stock will
be made, the number of shares to be awarded, the price (if any) to be paid by
the recipient (subject to Section 7.2), the time or times within which such
Awards may be subject to forfeiture, the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the Awards.
Unless otherwise determined by the Committee at grant, each Award of
Restricted Stock shall provide that in the event the Participant engages in
Detrimental Activity prior to, or during the one year period after, any vesting
of Restricted Stock, the Committee may direct (at any time within two years
thereafter) that all unvested Restricted Stock shall be immediately forfeited to
the Company and that the Participant shall pay over to the Company an amount
equal to the Fair Market Value at the time of vesting of any Restricted Stock
which had vested in the period referred to above. The foregoing provision shall
cease to apply upon a Change in Control.
The Committee may condition the grant or vesting of Restricted Stock upon
the attainment of specified performance goals, including established Performance
Goals in accordance with Section 162(m) of the Code, or such other factors as
the Committee may determine, in its sole discretion.
7.2 Awards and Certificates. An Eligible Employee or Consultant
selected to receive Restricted Stock shall not have any rights with respect to
such Award, unless and until such Participant has delivered to the Company a
fully executed copy of the applicable Award agreement relating thereto and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Purchase Price. The purchase price of Restricted Stock
shall be fixed by the Committee. Subject to Section 4.3, the purchase
price for shares of Restricted Stock may be zero to the extent permitted
by applicable law, and, to the extent not so permitted, such purchase
price may not be less than par value.
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(b) Acceptance. Awards of Restricted Stock must be accepted
within a period of 90 days (or such shorter period as the Committee may
specify at grant) after the Award date by executing a Restricted Stock
Award agreement and by paying whatever price (if any) the Committee has
designated thereunder.
(c) Legend. Each Participant receiving shares of Restricted
Stock shall be issued a stock certificate in respect of such shares of
Restricted Stock, unless the Committee elects to use another system, such
as book entries by the transfer agent, as evidencing ownership of shares
of Restricted Stock. Such certificate shall be registered in the name of
such Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The anticipation, alienation, attachment, sale,
transfer, assignment, pledge, encumbrance or charge of
the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of
Win-Gate Equity Group, Inc. (the "Company") Stock
Incentive Plan (the "Plan") and an Agreement entered
into between the registered owner and the Company
dated ____________. Copies of such Plan and Agreement
are on file at the principal office of the Company."
(d) Custody. If stock certificates are issued in respect of
shares of Restricted Stock, the Committee may require that any stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed and that, as a condition
to the grant of such Award of Restricted Stock, the Participant shall have
delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
7.3 Restrictions and Conditions on Restricted Stock Awards. Shares
of Restricted Stock awarded pursuant to this Plan shall be subject to Article
VIII and the following restrictions and conditions:
(a) Restriction Period; Vesting and Acceleration of Vesting.
The Participant shall not be permitted to Transfer shares of Restricted
Stock awarded under this Plan during the period or periods set by the
Committee (the "Restriction Period") commencing on the date of such Award,
as set forth in the Restricted Stock Award agreement and such agreement
shall set forth a vesting schedule and any events which would accelerate
vesting of the shares of Restricted Stock. Within these limits, based on
service, attainment of Performance Goals pursuant to Section 7.3(a)(ii)
below and/or such other factors or criteria as the Committee may determine
in its sole discretion, the Committee may provide for the lapse of such
restrictions in installments in whole or in part, or may accelerate the
vesting of all or any part of any Restricted Stock Award and/or waive the
deferral limitations for all or any part of any Restricted Stock Award.
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(i) Objective Performance Goals, Formulae or Standards.
If the grant of shares of Restricted Stock or the lapse of
restrictions is based on the attainment of Performance Goals, the
Committee shall establish the Performance Goals and the applicable
vesting percentage of the Restricted Stock Award applicable to each
Participant or class of Participants in writing prior to the
beginning of the applicable fiscal year or at such later date as
otherwise determined by the Committee and while the outcome of the
Performance Goals are substantially uncertain. Such Performance
Goals may incorporate provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including,
without limitation, dispositions and acquisitions) and other similar
type events or circumstances. With regard to a Restricted Stock
Award that is intended to comply with Section 162(m) of the Code, to
the extent any such provision would create impermissible discretion
under Section 162(m) of the Code or otherwise violate Section 162(m)
of the Code, such provision shall be of no force or effect. The
applicable Performance Goals shall be based on one or more of the
Performance Criteria set forth in Exhibit A hereto.
(b) Rights as Shareholder. Except as provided in this
subparagraph (b) and subparagraph (a) above and as otherwise determined by
the Committee, the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a holder of shares of Common Stock
of the Company including, without limitation, the right to receive any
dividends, the right to vote such shares and, subject to and conditioned
upon the full vesting of shares of Restricted Stock, the right to tender
such shares. The Committee may, in its sole discretion, determine at the
time of grant that the payment of dividends shall be deferred until, and
conditioned upon, the expiration of the applicable Restriction Period.
(c) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock subject to such
Restriction Period, the certificates for such shares shall be delivered to
the Participant. All legends shall be removed from said certificates at
the time of delivery to the Participant except as otherwise required by
applicable law or other limitations imposed by the Committee.
SECTION VIII.
NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY/DIRECTORSHIP
8.1 Non-Transferability. Except as otherwise specifically provided
herein, no Stock Option or Common Stock acquired pursuant to the exercise of a
Stock Option shall be Transferable by the Participant otherwise than by will or
by the laws of descent and distribution. All Stock Options shall be exercisable,
during the Participant's lifetime, only by the Participant. Except as otherwise
specifically provided herein, shares of Restricted Stock under Section VII or
Common Stock issued on account of such shares of Restricted Stock may not be
Transferred prior to the date on which such shares are issued, or if later, the
date on which any applicable restriction, performance or deferral period lapses.
No Award shall, except as otherwise
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specifically provided by law or herein, be Transferable in any manner, and any
attempt to Transfer any such Award except as otherwise specifically provided
herein, shall be void, and no such Award shall in any manner be liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
who shall be entitled to such Award, nor shall it be subject to attachment or
legal process for or against such person. Notwithstanding the foregoing, the
Committee may determine at the time of grant or thereafter that a Non-Qualified
Stock Option (other than a Non-Qualified Stock Option granted to a Non-Employee
Director) that is otherwise not Transferable pursuant to this Section 8.1 is
Transferable to a Family Member in whole or in part and in such circumstances,
and under such conditions, as specified by the Committee. A Non-Qualified Stock
Option that is Transferred to a Family Member pursuant to the preceding sentence
(i) may not be subsequently Transferred otherwise than by will or by the laws of
descent and distribution and (ii) remains subject to the terms of this Plan and
the Stock Option agreement.
8.2 Termination of Employment and Termination of Consultancy. The
following rules apply with regard to the Termination of a Participant. Unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter:
(a) Rules Applicable to Stock Options. Unless otherwise
determined by the Committee at grant or, if no rights of the Participant
are reduced, thereafter:
(1) Termination by Reason of Death, Disability or
Retirement. If a Participant's Termination is by reason of death,
Disability or Retirement, all Stock Options held by such Participant
may be exercised, to the extent exercisable at the time of the
Participant's Termination, by the Participant (or, in the case of
death, by the legal representative of the Participant's estate) at
any time within a period of one year from the date of such
Termination, but in no event beyond the expiration of the stated
terms of such Stock Options; provided, however, that, in the case of
Retirement, if the Participant dies within such exercise period, all
unexercised Stock Options held by such Participant shall thereafter
be exercisable, to the extent to which they were exercisable at the
time of death, for a period of one year from the date of such death,
but in no event beyond the expiration of the stated term of such
Stock Options.
(2) Involuntary Termination Without Cause. If a
Participant's Termination is by involuntary termination without
Cause, all Stock Options held by such Participant may be exercised,
to the extent exercisable at the time of a Participant's
Termination, by the Participant at any time within a period of 90
days from the date of such Termination, but in no event beyond the
expiration of the stated term of such Stock Options.
(3) Voluntary Termination. If a Participant's
Termination is voluntary (other than a voluntary termination
described in Section 8.2(a)(iv)(B) below) all Stock Options held by
such Participant may be exercised, to the extent exercisable
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at the time of a Participant's Termination, by the Participant at
any time within a period of 30 days from the date of such
Termination, but in no event beyond the expiration of the stated
terms of such Stock Options.
(4) Termination for Cause. If a Participant's
Termination (A) is for Cause or (B) is a voluntary termination (as
provided in subsection (iii) above) within 90 days after an event
which would be grounds for a Termination for Cause, all Stock
Options, even if vested, held by such Participant shall thereupon
terminate and expire as of the date of such Termination.
(5) Unvested Stock Options. Stock Options that are not
vested as of the date of a Participant's Termination for any reason
shall terminate and expire as of the date of such Termination.
(b) Rules Applicable to Restricted Stock. Subject to the
applicable provisions of the Restricted Stock Award agreement and this
Plan, upon a Participant's Termination for any reason during the relevant
Restriction Period, all Restricted Stock still subject to restriction will
vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant or thereafter.
SECTION IX.
CHANGE IN CONTROL PROVISIONS
9.1 Benefits. In the event of a Change in Control of the Company,
except as otherwise provided by the Committee upon the grant of an Award, the
Participant shall be entitled to the following benefits:
(a) Except to the extent provided in the applicable Award
agreement, the Participant's employment agreement with the Company or an
Affiliate, as approved by the Committee, or other written agreement
approved by the Committee (as such agreement may be amended from time to
time), (i) Awards granted and not previously exercisable shall become
exercisable upon a Change in Control and (ii) restrictions to which any
shares of Restricted Stock granted prior to the Change in Control are
subject shall lapse upon a Change in Control.
(b) In the event Section 4.2(d) of the Plan becomes
applicable, the Committee, in its sole discretion, may provide for the
purchase of any Stock Option by the Company or an Affiliate for an amount
of cash equal to the excess of the Change in Control Price of the shares
of Common Stock covered by such Stock Options, over the aggregate exercise
price of such Stock Options. For purposes of this Section 9.1, Change in
Control Price shall mean the higher of (i) the highest price per share of
Common Stock paid in any transaction related to a Change in Control of the
Company, or (ii) the highest Fair Market
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Value per share of Common Stock at any time during the 60 day period
preceding a Change in Control.
(c) Notwithstanding anything to the contrary herein, unless
the Committee provides otherwise at the time a Stock Option is granted
hereunder or thereafter, a Participant's Stock Options granted and not
previously exercisable shall become fully exercisable and vested upon a
Change in Control if the Committee reasonably determines in good faith,
prior to the occurrence of the Change in Control, that the Stock Options
shall not be honored or assumed, or new rights substituted therefor (each
such honored, assumed or substituted stock option hereinafter called an
"Alternative Option"), by a Participant's employer (or the parent or a
subsidiary of such employer) immediately following the Change in Control.
A Stock Option shall not be Alternative Option unless the Committee
determines, in good faith, that it meets the following criteria:
(1) the Alternative Option must be based on stock which
is traded on an established securities market, or which will be so
traded within 30 days of the Change in Control;
(2) the Alternative Option must provide such Participant
with rights and entitlements substantially equivalent to or better
than the rights, terms and conditions applicable under such Stock
Option, including, but not limited to, an identical or better
exercise schedule; and
(3) the Alternative Option must have economic value
substantially equivalent to the value of such Stock Option
(determined at the time of the Change in Control).
For purposes of Incentive Stock Options, any assumed or substituted Stock
Option shall comply with the requirements of Treasury Regulation ss.
1.425-1 (and any amendments thereto).
(d) Notwithstanding anything else herein, the Committee may,
in its sole discretion, provide for accelerated vesting of an Award or
accelerated lapsing of restrictions on shares of Restricted Stock at any
time.
(e) If the Company and the other party to a transaction
constituting a Change in Control agree that such transaction shall be
treated as a "pooling of interests" for financial reporting purposes, and
if the transaction is in fact so treated, then the acceleration of
exercisability, vesting or lapse of the applicable Restriction Period
shall not occur to the extent that the Company's independent public
accountants determine in good faith that such acceleration would preclude
"pooling of interests" accounting.
9.2 Change in Control. A "Change in Control" shall be deemed to have
occurred:
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(a) upon any "person" as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, any trustee or
other fiduciary holding securities under any employee benefit plan of the
Company, or any company owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of
Common Stock of the Company), becoming the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of
the Company's then outstanding securities; provided, however, that if any
person becomes the beneficial owner of such securities but does not become
entitled to the voting power of such securities, such person's acquisition
of such securities shall not constitute a Change in Control of the
Company;
(b) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
paragraph (a), (c), or (d) of this Section or a director whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than
the Board) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of the two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority of the Board;
(c) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no person (other than those covered by the exceptions in (a) above)
acquires more than 50% of the combined voting power of the Company's then
outstanding securities shall not constitute a Change in Control of the
Company; or
(d) upon the shareholders of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets other than the sale or disposition of all or substantially all of
the assets of the Company to a person or persons who beneficially own,
directly or indirectly, at least 50% or more of the combined voting power
of the outstanding voting securities of the Company at the time of the
sale.
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SECTION X.
TERMINATION OR AMENDMENT OF PLAN
Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Section XIII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the shareholders of the Company in accordance with the laws of the
State of Delaware, solely to the extent required by the applicable provisions of
Rule 16b-3 or Section 162(m), or, solely to the extent applicable to Incentive
Stock Options, Section 422 of the Code, no amendment may be made which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) increase the maximum individual Participant limitations for a
fiscal year under Section 4.1(b); (iii) change the classification of employees,
Consultants or Non-Employee Directors eligible to receive Awards under this
Plan; (iv) decrease the minimum option price of any Stock Option; (v) extend the
maximum Stock Option period under Section 6.3; or (vi) materially alter the
Performance Criteria for the Award of Restricted Stock as set forth in Exhibit
A. In no event may this Plan be amended without the approval of the shareholders
of the Company in accordance with the applicable laws of the State of Delaware
to increase the aggregate number of shares of Common Stock that may be issued
under this Plan, decrease the minimum exercise price of any Stock Option, or to
make any other amendment that would require shareholder approval under the rules
of any exchange or system on which the Company's securities are listed or traded
at the request of the Company.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
SECTION XI.
STOCK OPTION GRANT FOR NON-EMPLOYEE DIRECTORS
11.1 Stock Options. The terms of this Article XI shall apply only to
Stock Options granted to Non-Employee Directors.
11.2 Grants for Non-Employee Directors. Without further action by
the Board or the shareholders of the Company, each Non-Employee Director shall,
subject to the terms of the Plan, be granted Stock Options to purchase 50,000
shares of Common Stock as of the later of (i)
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the date the Non-Employee Director begins service as a Non-Employee Director or
(ii) the Effective Date.
11.3 Terms of Stock Options. Stock Options granted under this
Section XI shall be subject to the following terms and conditions, and shall be
in such form and contain such additional terms and conditions, not inconsistent
with the terms of this Plan, as the Board shall deem desirable:
(a) Exercise Price. The exercise price per share of Common
Stock shall be determined by the Board but shall not be less than 100% of
the Fair Market Value of the share of Common Stock at the time of grant.
(b) Stock Option Term. The term of each Stock Option granted
under this Article XI shall be 10 years.
(c) Exercisability. Stock Options granted under this Section
XI shall be 50% vested and exercisable on the date such Stock Option is
granted and 50% vested and exercisable on the first anniversary of the
date of grant (the "Vesting Date").
(d) Method of Exercise. Subject to whatever installment
exercise and waiting period and vesting provisions apply under
subparagraph (c) above, Stock Options may be exercised in whole or in part
at any time and from time to time during the Stock Option term by giving
written notice of exercise to the Board specifying the number of shares to
be purchased. Such notice shall be accompanied by payment in full of the
purchase price as follows: (i) in cash or by check, bank draft or money
order payable to the order of the Company; (ii) if the Common Stock is
traded on a national securities exchange, The Nasdaq Stock Market, Inc. or
quoted on a national quotation system sponsored by the National
Association of Securities Dealers, and the Board authorizes, through a
"cashless exercise" procedure whereby the Non-Employee Director delivers
irrevocable instructions to a broker approved by the Board to deliver
promptly to the Company an amount equal to the exercise price; or (iii) on
such other terms and conditions as may be acceptable to the Board
(including, without limitation, the relinquishment of Stock Options or by
payment in full or in part in the form of Common Stock owned by the
Participant for a period of at least six months or such other period
necessary to avoid a charge, for accounting purposes, against the
Company's earnings as reported in the Company's financial statements (and
for which the Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common Stock on the
payment date as determined by the Board). No shares of Common Stock shall
be issued until payment therefor, as provided herein, has been made or
provided for.
5. Form, Modification, Extension and Renewal of Stock Options.
Subject to the terms and conditions and within the limitations of the
Plan, a Stock Option shall be evidenced by such form of agreement or grant
as is approved by the Board, and the Board
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may modify, extend or renew outstanding Stock Options granted under the
Plan (provided that the rights of a Non-Employee Director are not reduced
without his or her consent).
11.4 Termination of Directorship. The following rules apply with
regard to Options upon a Termination of Directorship:
(a) Termination of Directorship. Except as otherwise provided
herein, upon the Termination of Directorship for any reason, all
outstanding Stock Options then exercisable and not exercised by the
Non-Employee Director prior to such Termination of Directorship shall
remain exercisable, to the extent exercisable at the Termination of
Directorship, by the Non-Employee Director, or, in the case of death, by
the Non-Employee Director's estate or by the person given authority to
exercise such Stock Options by his or her will or by operation of law, for
a three (3) year period commencing on the date of the Termination of
Directorship, provided that such three (3) year period shall not extend
beyond the stated term of such Stock Options.
(b) Cancellation of Stock Options. Except as otherwise
provided herein, no Stock Options that were not exercisable during the
period such person serves as a Director shall thereafter become
exercisable upon a Termination of Directorship for any reason or no reason
whatsoever, and such Stock Options shall terminate and become null and
void upon a Termination of Directorship.
11.5 Acceleration of Exercisability.
(a) Death or Disability. All Stock Options granted to
Non-Employee Directors under this Article XI and not previously
exercisable shall become fully exercisable immediately upon a Termination
of Directorship due to a Non-Employee Director's death or Disability.
(b) Change in Control. All Stock Options granted to
Non-Employee Directors under this Article XI and not previously
exercisable shall become fully exercisable immediately upon a Change in
Control.
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11.6 Changes. The Awards to a Non-Employee Director shall be subject
to Sections 4.2(a), (b) and (c) of the Plan and this Section 11.6, but shall not
be subject to Section 4.2(d) of the Plan.
11.7 Amendment. The provisions of this Article XI shall not be
amended more than once in any six month period, other than to comply with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or other applicable federal or state law.
SECTION XII.
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments as to which a Participant
has a fixed and vested interest but which are not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general unsecured creditor of the Company.
SECTION XIII.
GENERAL PROVISIONS
13.1 Legend. The Committee may require each person receiving shares
pursuant to an Award under this Plan to represent to and agree with the Company
in writing that the Participant
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is acquiring the shares without a view to distribution thereof and such other
securities law related representations as the Committee shall request. In
addition to any legend required by this Plan, the certificates for such shares
may include any legend which the Committee deems appropriate to reflect any
restrictions on Transfer.
All certificates for shares of Common Stock delivered under this
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed or any national securities association
system upon whose system the Common Stock is then quoted, any applicable Federal
or state securities law, and any applicable corporate law, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. Each certificate for shares of Common Stock
delivered under this Plan shall include a legend substantially in the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY THE ISSUER, THE ISSUER SHALL
BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF
EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A PRECONDITION TO ANY
SUCH TRANSFER
13.2 Other Plans. Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. In the event
of any conflict between the provisions of this Plan and any agreement (including
any Stock Option agreement) approved by the Board or the Committee, between the
Company and any Eligible Employee, Consultant or Non-Employee Director, the
provisions of such agreement shall govern.
13.3 No Right to Employment/Consultancy/Directorship. Neither this
Plan nor the grant of any Award hereunder shall give any Participant or other
employee, Consultant or Non- Employee Director any right with respect to
continuance of employment, consultancy or directorship by the Company or any
Affiliate, nor shall they be a limitation in any way on the right of the Company
or any Affiliate by which an employee is employed or a Consultant or Non-
Employee Director is retained to terminate his or her employment or consultancy
at any time.
13.4 Withholding of Taxes. The Company shall have the right to
deduct from any payment to be made to a Participant, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be withheld. Upon the vesting of Restricted
Stock, or upon making an election under Section 83(b) of the Code, a Participant
shall pay all required withholding to the Company.
Any statutorily required withholding obligation with regard to any
Eligible Employee may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.
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13.5 Listing and Other Conditions.
(a) As long as the Common Stock is listed on a national
securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to an Award
shall be conditioned upon such shares being listed on such exchange or
system. The Company shall have no obligation to issue such shares unless
and until such shares are so listed, and the right to exercise any Stock
Option with respect to such shares shall be suspended until such listing
has been effected.
(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an
Award is or may in the circumstances be unlawful or result in the
imposition of excise taxes on the Company under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the
Securities Act or otherwise with respect to shares of Common Stock or
Awards, and the right to exercise any Stock Option shall be suspended
until, in the opinion of said counsel, such sale or delivery shall be
lawful and will not result in the imposition of excise taxes on the
Company.
(1) Upon termination of any period of suspension under
this Section 13.5, an Award affected by such suspension which shall not
then have expired or terminated shall be reinstated as to all shares
available before such suspension and as to shares which would otherwise
have become available during the period of such suspension, but no such
suspension shall extend the term of any Stock Option.
(2) A Participant shall be required to supply the
Company with any certificates, representations and information that the
Company requests and otherwise cooperate with the Company in obtaining any
listing, registration, qualification, exemption, consent or approval the
Company deems necessary or appropriate.
13.6 Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
13.7 Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply. To the
extent applicable, this Plan shall be limited, construed and interpreted in a
manner so as to comply with the applicable requirements of Rule 16b-3; however,
noncompliance with Rule 16b-3 shall have no impact on the effectiveness of an
Award under this Plan.
13.8 Other Benefits. No Award payment under this Plan shall be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or
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its subsidiaries nor affect any benefits under any other benefit plan now or
subsequently in effect under which the availability or amount of benefits is
related to the level of compensation.
13.9 Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.
13.10 No Right to Same Benefits. The provisions of Awards need not
be the same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
13.11 Death/Disability. The Committee may in its discretion require
the transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the Transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of this Plan.
13.12 Section 16(b) of the Exchange Act. All elections and
transactions under this Plan by persons subject to Section 16 of the Exchange
Act involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3. The Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of this Plan and the transaction of business
thereunder.
13.13 Successors and Assigns. The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.
13.14 Severability of Provisions. If any provision of this Plan
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and this Plan shall be construed
and enforced as if such provisions had not been included.
13.15 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.
13.16 Payment to Minors, Etc. Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Board, the Company, its
Affiliates and their employees, agents and representatives with respect thereto.
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SECTION XIV.
EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board, subject to the
approval of this Plan by the shareholders of the Company in accordance with the
requirements of the laws of the State of Florida, or such later date as provided
in the adopting resolution.
SECTION XV.
TERM OF PLAN
No Award shall be granted pursuant to this Plan on or after the tenth
anniversary of the earlier of the date this Plan is adopted or the date of
shareholder approval, but Awards granted prior to such tenth anniversary may,
and the Committee's authority to administer the terms of such Stock Options
shall, extend beyond that date.
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EXHIBIT A
PERFORMANCE CRITERIA
Performance Goals established for purposes of conditioning the grant
of an Award of Restricted Stock based on performance or the vesting of
performance-based Awards of Restricted Stock, Performance Units and/or
Performance Shares shall be based on one or more of the following performance
criteria ("Performance Criteria"): (i) the attainment of certain target levels
of, or a specified percentage increase in, revenues, income before income taxes
and extraordinary items, net income, earnings before income tax, earnings before
interest, taxes, depreciation and amortization, funds from operation of real
estate investments or a combination of any or all of the foregoing; (ii) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax profits including, without limitation, that attributable to
continuing and/or other operations; (iii) the attainment of certain target
levels of, or a specified increase in, operational cash flow; (iv) the
achievement of a certain level of, reduction of, or other specified objectives
with regard to limiting the level of increase in, all or a portion of, the
Company's bank debt or other long-term or short-term public or private debt or
other similar financial obligations of the Company, which may be calculated net
of such cash balances and/or other offsets and adjustments as may be established
by the Committee; (v) the attainment of a specified percentage increase in
earnings per share or earnings per share from continuing operations; (vi) the
attainment of certain target levels of, or a specified increase in return on
capital employed or return on invested capital; (vii) the attainment of certain
target levels of, or a percentage increase in, after-tax or pre-tax return on
shareholders' equity; (viii) the attainment of certain target levels of, or a
specified increase in, economic value added targets based on a cash flow return
on investment formula; (ix) the attainment of certain target levels in the fair
market value of the shares of the Company's common stock; (x) the growth in the
value of an investment in the Company's common stock assuming the reinvestment
of dividends; and (xi) reducing costs of the Company, as evidenced by meeting or
reducing budgeted expenses established by the Company. For purposes of item (i)
above, "extraordinary items" shall mean all items of gain, loss or expense for
the fiscal year determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to a corporate transaction (including,
without limitation, a disposition or acquisition) or related to a change in
accounting principle, all as determined in accordance with standards established
by Opinion No. 30 of the Accounting Principles Board.
In addition, such Performance Criteria may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted under
Code Section 162(m), but only to the extent permitted under Code Section 162(m)
(including, without limitation, compliance with any requirements for shareholder
approval), the Committee may: (i) designate additional business criteria on
which the Performance Criteria may be based or (ii) adjust, modify or amend the
aforementioned business criteria.
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