Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act
of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-
12
NAVIDEC, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid: _____________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement Number:
3) Filing party:
4) Date filed:
NAVIDEC, INC.
14 Inverness Drive
Building F, Suite 116
Englewood, Colorado 80112
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1999 at 1:00 PM
To the Shareholders of NAVIDEC, Inc.:
An Annual Meeting of the shareholders of NAVIDEC, Inc. (the "Company") will be
held at the Inverness Hotel & Golf Club, 200 Inverness Drive West, Englewood,
Colorado 80112 at 1:00 P.M. on June 17, 1999, or at any adjournment or
postponement thereof, to vote upon the election of directors, to vote upon a
proposal to increase from one million to two million the number of shares of
the Company's common stock issuable upon the exercise of options granted under
the Company's Stock Option Plan and to transact such other business as may
properly come before the meeting.
Details relating to these matters are set forth in the attached Proxy
Statement. All shareholders of record as of the close of business on April
21, 1999 will be entitled to notice of, and to vote at, such meeting or at any
adjournment or postponement thereof.
Also enclosed is a copy of the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1998.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN
THE ENCLOSED PROXY. THE DELIVERY OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
BY ORDER OF THE
BOARD OF DIRECTORS
Ralph Armijo
President and Director
May __, 1999
PROXY STATEMENT
NAVIDEC, INC.
c/o American Securities Transfer, Inc.
P.O. Box 1596
Denver, CO 80201-1596
(303) 234-5300
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 17, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of NAVIDEC, Inc. (the "Company"), a Colorado
corporation, to be voted at an Annual Meeting of Shareholders of the Company
("Annual Meeting") to be held on June 17, 1999 at the Inverness Hotel and Golf
Club, 200 Inverness Drive West, Englewood, Colorado at 1:00 P.M. or at any
adjournment or postponement thereof. The Company anticipates that this Proxy
Statement and accompanying form of Proxy will be first mailed or given to all
shareholders of the Company on or about May 21, 1999. The shares represented
by all proxies that are properly executed and submitted will be voted at the
meeting in accordance with the instructions indicated thereon. Unless
otherwise directed, votes will be cast FOR the proposals presented. The vote
of a majority of the shares represented at the meeting in person or by proxy
will be required to enact any or all of the proposals.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in
person, at the Annual Meeting that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed herewith and all costs of soliciting
proxies will be paid by the Company. In addition to the solicitation by mail,
proxies may be solicited by Officers and regular employees of the Company by
telephone, telegraph or personal interview. Such persons will receive no
compensation for their services other than their regular salaries.
Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of the shares held on record date by such persons, and the
Company may reimburse such persons for reasonable out-of-pocket expenses
incurred by them in so doing.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The close of business on April 21, 1999, has been fixed by the Board of
Directors of the Company as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. At such
date, there were outstanding 7,346,419 shares of the Company's no par value
common stock (hereinafter referred to as the "Common Stock"), each of which
entitles the holder thereof to one vote per share on each matter which may
come before the meeting. Cumulative voting is not permitted. The Company has
no other class of voting securities outstanding.
A majority of the issued and outstanding shares of the Company's Common
Stock entitled to vote, represented in person or by proxy, constitutes a
quorum at any shareholders' meeting. If a quorum is present, the affirmative
vote of a majority of shares represented in person or by proxy will be
required to approve the matters upon which the shareholders are to vote.
Accordingly, any shares present but not voted shall have the same effect as
shares voted against approval.
NOMINEES FOR DIRECTOR
The Company's Board of Directors currently consists of seven members. All
directors hold office until the next annual meeting of the Company's
shareholders and their successors are elected and qualified. The nominees for
the directors to be elected at the Annual Meeting are the current directors of
the Company, who are Ralph Armijo, Andrew Davis, Patrick R. Mawhinney, Lloyd
G. Chavez, Jr., Gerald A. Marroney, James Hosch and Michael S. Kranitz.
The proxies will be voted for the nominees for director unless a contrary
specification is made in the proxy. All nominees have indicated their
willingness to serve as directors of the Company. However, if any nominee is
unable or should decline to serve as a director, it is the intention of the
person named in the proxy to vote for such other person as he in his
discretion shall determine.
The following table sets forth, with respect to each nominee for
director, the nominee's age, his positions and offices with the Company, and
the year in which he first became a director of the Company. Individual
background information concerning each of the nominees follows the table.
<TABLE>
Period from
Name Age Position Which Served
- ----- ----- -------- ------------------
<S> <C> <C> <C>
Ralph Armijo 45 President, Chief Executive 7/93
Officer and Director
Patrick R. Mawhinney 35 Chief Financial Officer, 7/96
Treasurer and Director
Michael Kranitz 38 President Automotive Division 12/98
and Director
Andrew Davis 45 Director 4/97
Lloyd G. Chavez, Jr. 48 Director 4/97
Gerald A. Marroney 46 Director 4/97
James Hosch 45 Director 6/98
</TABLE>
RALPH ARMIJO has served as the Company's President, Chief Executive
Officer and as one of the Company's directors since its inception in 1993.
From 1981 to 1993, Mr. Armijo was employed by Tektronix, Inc., a large
communications company which also produced testing and measuring
equipment. Mr. Armijo's responsibilities at Tektronix progressed from
sales manager, to branch manager, to district manager and, ultimately, to
Western Regional Manager, a position he held for five years. In that
position, he was responsible for a $100 million budget in sales, graphics,
technical support and administration, and he was responsible for
developing new distribution channels, including reseller agreements.
From 1976 to 1981, Mr. Armijo was employed by IBM Corporation, where
he sold computerized accounting and financial applications to small
and medium-sized businesses. Mr. Armijo received his B.A. from Colorado
College and his M.B.A. from the University of California, Los Angeles.
PATRICK R. MAWHINNEY served as the President of Interactive Planet,
Inc. from its inception until its merger with the Company in July 1996.
Since that time he has served as the Company's Chief Financial Officer,
Treasurer and as one of the Company's directors. From May 1995 until May 1996,
Mr. Mawhinney also served as a financial/accounting consultant for
MIS\Sunguard, a provider of accounting and investment software. Mr.
Mawhinney was employed as an Assistant Vice President of The Bank of Cherry
Creek from November 1993 to May 1995; as a Vice President of Vectra Banking
Corporation from June 1989 to November 1993; and as Operations Coordinator
for Zions Bancorporation from August 1986 to June 1989. He received his B.S.
from Colorado State University.
MICHAEL KRANITZ has been one of the Company's directors and the
Company's Vice President of Strategic Development since December 1998. From
October 1997 until December 1998, Mr. Kranitz was the CEO and President of
LeaseSource, Inc. From January 1997 until October 1997, Mr. Kranitz worked
with a computer company primarily on the development of the intellectual
property used by LeaseSource, Inc. and in October 1997, Mr. Kranitz
acquired from that company those intellectual property rights. From 1994
until December 1996, Mr. Kranitz was a partner with the law firm of Benesch,
Friedlander, Coplan & Aronoff, LLP located in Cleveland, Ohio. Mr. Kranitz
is also the author of Look Before You Lease: Secrets to Smart Vehicle
Leasing. Mr. Kranitz received a BS in Economics with high honors from the
University of Florida in 1982 and a JD from Vanderbilt School of Law in 1985.
ANDREW DAVIS has been one of the Company's directors since December
1997. Mr. Davis has served as Director of Global & Strategic Accounts for
InFocus Systems. Since December 1997, Mr. Davis served as the Company's Vice
President of Sales and Marketing from May 1996 until December 1997. He
became one of the Company's directors in April 1997. From January 1994 to May
1996, Mr. Davis was manager of wholesale distribution at InFocus Systems,
a manufacturer of high resolution projection systems. From September 1982
to January 1994, Mr. Davis held various sales and marketing positions in
Tektronix, Inc. including Director of Marketing for the Interactive
Technologies Division. Mr. Davis attended the University of Denver from 1971
to 1974 where he studied Business Management and Marketing.
LLOYD G. CHAVEZ, JR. became one of the Company's directors in April
1997. He has been a director of the Burt group of automobile dealerships
in Denver, Colorado since 1988 and Director of Automotive Markets of the
Burt group since 1994. From 1983 to 1994, Mr. Chavez was Vice
President of Fort Dodge Laboratories, a subsidiary of American Home
Products, where he was responsible for business acquisitions, new
products and technologies, joint ventures, intellectual property
acquisitions, strategic planning, market research and sale projections. From
1982 to 1983, Mr. Chavez was Vice President of General Genetics
Corporation, where he was responsible for management of biological and
pharmaceutical research and development. Mr. Chavez received his B.A.
in Molecular, Cellular, Development Biology from the University of Colorado,
his M.A. in Old Testament Studies from Denver Seminary, his Ph.D. in
Microbiology and Immunology from the University of Virginia, and was a post-
doctoral Fellow in Chemistry at Cornell University.
GERALD A. MARRONEY became one of the Company's directors in April 1997.
He has served as a State of Colorado District Court Judge in Pueblo
County, Colorado since 1990. Prior to such time he was a practicing attorney
in Pueblo, Colorado. Mr. Marroney received his B.S. in Political Science
from Southern Colorado State College in 1973 and his J.D. from Oklahoma
City University in 1976.
JAMES HOSCH has been one of the Company's directors since June 1998.
Since November 1998, Mr. Hosch has been an independent representative for
Bathgate McColley Capital Group LLC, a NASD registered broker dealer. From
September 1995 until November1998 Mr. Hosch was a Senior Vice President of
Joseph Charles & Associates, Inc., a NASD registered broker dealer.
From January 1993 until September 1995, he was Executive Vice President of
Cohig & Associates, Inc., a NASD registered broker dealer. From 1989 until
January 1993, he was President of Kober Corporation, a publicly traded real
estate firm.
None of the Company's directors are related to any other director or
executive officer. None of the Company's directors hold any directorships in
any other public company.
Committees and Meetings
The Board has a Compensation Committee and an Audit Committee, but does
not have a standing nominating committee or other committee performing similar
functions. The Compensation Committee's primary function is to oversee the
administration of the Company's employee benefit plans and to establish the
Company's compensation policies. The Compensation Committee recommends to the
Board the compensation arrangements for senior management and directors,
adoption of compensation plans in which officers and directors are eligible to
participate, and the granting of stock options or other benefits under
compensation plans. This committee, comprised of Messrs. Chavez, Marroney,
and Mawhinney, met twice during 1998. All members of the Compensation
Committee attended each meeting. The Audit Committee assists the Board in
fulfilling its responsibilities for financial reporting by the Company. The
Audit Committee recommends the engagement and discharge of independent
auditors, directs and supervises special investigations when necessary,
reviews with independent auditors the audit plan and the results of the audit,
reviews the independence of the independent auditors, considers the range of
audit fees, and reviews the scope and results of the Company's procedures for
internal auditing and the adequacy of its system of internal accounting
controls. Members of the Audit Committee are Messrs. Chavez, Marroney, and
Mawhinney. The Audit Committee met three times during 1998 to review the
audit plan and the results of the audit and to plan and recommend auditors for
the next audit. All members of the Audit Committee attended each meeting.
During 1998, the full Board of Directors met at times. No director
attended less than 75% of the total of Board and committee meetings held
during the director's tenure on the Board and its committees.
Section 16(a) Beneficial Ownership Reporting Compliance
Under U.S. securities laws, directors, certain executive officers and
persons holding more than 10 percent of the Company's common stock must report
their initial ownership of the common stock and any changes in that ownership
to the SEC. The SEC has designated specific due dates for those reports and
the Company must identify in this report those persons who did not file those
reports when due. Based solely on the Company's review of copies of the
reports filed with the SEC and written representations of its directors and
executive officers, the Company believes that all persons subject to reporting
filed the required reports on time in 1998.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual compensation paid to the
Company's Chief Executive Officer and one other executive officer of the
Company, for the last three fiscal years and of one executive officer of the
Company during 1998. No other executive officer has received annual
compensation in excess of $100,000 during the Company's last three fiscal
years.
<TABLE>
Long Term Compensation
Securities All Other
Name and Annual Restricted Underlying Compen-
Principal Compen- Stock Options/ LTIP sation
Position Year Salary Bonus sation Award(s) SARs(#) Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph
Armijo, 1998 $172,133 $ 0 $0 $ 0 146,000(1) $ 0 $9,600(2)
CEO
1997 $156,141 $12,869 $0 $ 0 0 $ 0 $9,600(2)
1996 $124,384 $ 0 $0 $ 0 0 $ 0 $9,000(2)
Hal
Anderson,1998 $89,708 $20,000 $0 $ 0 50,000(3) $ 0 $ 0
VP
Auto-
motive 1997 $80,000 $19,958 $0 $ 0 22,000(3) $ 0 $ 0
1996 $39,666 $ 0 $0 $ 0 0 $ 0 $ 0
Ken Bero,1998 $104,706 $25,000 $0 $ 0 125,000(4) $ 0 $ 0
VP Sales(5)
</TABLE>
(1) The number indicated represents the number of stock options granted to
Mr. Armijo during 1998.
(2) Consists of an automobile allowance.
(3) The number indicated represents the number of stock options granted to
Mr. Anderson during 1998 and 1997.
(4) The number indicated represents the number of stock options granted to
Mr. Bero during 1998.
(5) Mr. Bero commenced working with the Company in December 1997 but did not
receive any compensation from the Company until after January 1, 1998.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning individual grants
of stock options made during the year ended December 31, 1998 to the Company's
Chief Executive Officer and two other named executive officers.
<TABLE>
Individual Grants
Number of
Securities % of Total Options
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted Fiscal Year Price ($/Sh) Date
<S> <C> <C> <C> <C>
Ralph Armijo 146,000 12% $3.00 2/13/03
Ken Bero 75,000 6% $3.00 2/13/02
Ken Bero 50,000 4% $3.00 10/31/05
Hal Anderson 50,000 6% $2.44 9/11/03
</TABLE>
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1998 by the Company's Chief
Executive Officer and two other named executive officers, and the fiscal year-
end value of unexercised options held by him.
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized Unexercisable Unexercisable(2)
<S> <C> <C> <C> <C>
Ralph Armijo 0 (1) 0 146,000/0 $301,125/$0
Ken Bero 0 (1) 0 50,000/75,000 $103,125/$154,687
Hal Anderson 0 (1) 0 22,000/50,000 $0/$131,125
</TABLE>
(1) Messrs. Armijo, Bero and Anderson did not exercise any of the stock
options they held during 1998.
(2) The value indicated was calculated by determining the difference between
the fair market value of the Company's common stock underlying the stock
options and the exercise price of those options at December 31, 1998.
Director Compensation
None of the Company's directors received any compensation during the most
recent fiscal year for serving in their position as a director. Outside
members of the Board of Directors may received 10,000 stock options issued
under the Company's stock option plan.
Employment Agreements and Termination of Employment and Change-in-
Control Arrangements
The Company entered an Employment Agreement with Mr. Armijo that is
effective May 1, 1998. The term of that agreement is for one year and it may
renew automatically for two additional one-year periods provided that neither
Mr. Armijo nor the Company provide the other with notice of its intent to not
renew the agreement at least thirty days before the anniversary date of the
agreement. Mr. Armijo's current annual salary under the agreement is $150,000
and his salary is reviewed annually. The agreement also provides that Mr.
Armijo will be paid an annual bonus. If Mr. Armijo remains employed with the
Company through the first anniversary date of the agreement, the Company must
pay Mr. Armijo a special bonus (the "Special Bonus") in the event that there
is a "Change in Control" of the Company. "Change in Control" is defined in the
agreement. The Special Bonus will be equal to Mr. Armijo's then effective
annual salary, plus the greater of
the annual bonus paid or payable for the most recently completed fiscal
year during the term of the agreement, and
the average of the bonuses paid or payable to Mr. Armijo in respect of
1998, 1997 and 1996.
The higher of the two numbers is referred to as the "Highest Annual Bonus."
The agreement provides that if the Company terminates Mr. Armijo other than
for "Cause" or "Disability" or Mr. Armijo terminates his employment either for
"Good Reason" or without any reason during a thirty day period immediately
following May 1, 1999, the Company must pay Mr. Armijo a lump sum cash payment
equal to
his annual salary through the date of termination,
the Highest Annual Bonus through the date of termination,
the Special Bonus, if any, and
an amount equal to the product of two times his then effective annual
salary, the Highest Annual Bonus and the Special Bonus, if any.
The Company may terminate Mr. Armijo's employment for "Cause" and shall
be obligated only to pay Mr. Armijo his annual salary through the date of
termination.
401(k) Plan
The Company has a 401(k) profit sharing plan. Eligible employees may make
voluntary contributions to the plan. The amount of employee contributions is
limited as specified in the plan. The Company may, at its discretion, make
additional contributions to the plan. The Company did not make any
contributions in 1998.
Stock Option Plan
The Company's officers and directors may receive stock options issued
under the Company's stock option plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 9, 1999,
concerning the beneficial ownership of the Company's common stock by each
person who beneficially owns more than five percent of the common stock; by
each of the Company's executive officers and directors; and by all executive
officers and directors as a group.
<TABLE>
COMMON STOCK PERCENT OF
NAME AND ADDRESS OF BENEFICIALLY BENEFICIAL
BENEFICIAL OWNER(2) OWNED OWNERSHIP
<S> <C> <C>
Ralph Armijo 978,659(3) 12.8%
Patrick R. Mawhinney 206,357(3) 2.7%
Harold Anderson II 83,073(3) 1.1%
Kenneth P. Bero 50,000(3) (1)
Michael Kranitz 333,334(3)(6) 4.4%
Andrew Davis 21,250(3) (1)
Lloyd G. Chavez, Jr. 14,250(3)(4) (1)
Gerald A. Marroney 10,000(3) (1)
James Hosch 51,096(5) (1)
All directors and executive
officers as a Group
(Nine Persons) 1,748,019 22.2%
</TABLE>
Rule 13d-3 under the Securities Exchange Act of 1934, provides the
determination of beneficial owners of securities. That rule includes as
beneficial owners of securities, any person who directly or indirectly has, or
shares, voting power and/or investment power with respect to such securities.
Rule 13d-3 also includes as a beneficial owner of a security any person who
has the right to acquire beneficial ownership of such security within sixty
days through means, including, the exercise of any option, warrant or
conversion of a security. Any securities not outstanding which are subject to
such options, warrants or conversion privileges are deemed to be outstanding
for the purpose of computing the percentage of outstanding securities of the
class owned by such person. Those securities are not deemed to be outstanding
for the purpose of computing the percentage of the class by any other person.
(1) Less than one percent.
(2) Except as indicated herein, the address for each person is 14 Inverness
Drive, Building F, Suite 116, Englewood, Colorado 80112.
(3) The number of shares indicated includes shares of common stock
underlying options that are currently exercisable, which are held by the
following persons in the amounts indicated: Mr. Armijo (146,000); Mr.
Mawhinney (57,000); Mr. Anderson (22,000); Mr. Davis (10,000); Mr.
Marroney (10,000); Mr. Chavez (10,000); and Mr. Kranitz (83,334).
(4) LGC Management owns 4,250 shares of common stock. Mr. Chavez is
President of LGC Management and may be deemed the beneficial owner of
such shares.
(5) The number of shares indicated includes 50,500 shares of common stock
underlying options and warrants held by Mr. Hosch that are currently
exercisable.
(6) The number of shares indicated includes 61,250 shares of common stock
owned by Mr. Kranitz's wife, Abby L. Kranitz. Mr. Kranitz is deemed to
beneficially own the shares held by Ms. Kranitz.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1997, Pat Mawhinney made a $30,000 loan to the Company,
evidenced by a promissory note dated October 5, 1997, which did not bear
interest. The loan was repaid in November 1997.
In October 1997, Ralph Armijo guaranteed a line of credit in the amount
of $750,000 extended to the Company by USA Funding, Dallas, Texas. No
compensation was paid by the Company for such personal guarantee.
In March 1998, Pat Mawhinney made a $40,000 loan to the Company,
evidenced by a promissory note dated March 13, 1998, which did not bear
interest. The loan was repaid on March 31, 1998.
In October 1998, Pat Mawhinney made a $45,000 loan to the Company,
evidenced by a promissory note dated October 2, 1998, which did not bear
interest. The loan was repaid on November 25, 1998.
James Hosch, a former Executive Vice President of Joseph Charles &
Associates, Inc., has been one of the Company's directors since June, 1998.
Joseph Charles & Associates received $143,750 in commissions and $35,938 in
expenses as the placement agent for a private placement of an aggregate of
$1,437,500 principal amount of the Company's 10% Unsecured Subordinated
Convertible Promissory Notes. The notes were sold from August 1996 until
October 18, 1996. The notes were automatically converted into an aggregate of
349,126 units in our initial public offering of securities.
Joseph Charles & Associates was the managing underwriter for the
Company's initial public offering of securities. The Company offered 1,000,000
units in that offering consisting of one share of the Company's Common Stock
and one common stock purchase warrant. Of the 1,000,000 shares of common stock
and 1,000,000 warrants included in the offering, 755,000 shares of common
stock and 755,000 warrants were sold by the Company and 245,000 units were
sold by certain of the Company's shareholders. The units were sold on a firm
commitment basis and Joseph Charles & Associates received a 10% discount on
the public offering price of $6.00 per unit. Joseph Charles & Associates
received pursuant to the underwriting agreement for that offering a non-
accountable expense allowance equal to 3% of the total proceeds of the
offering, or $180,000. The Company also agreed to retain Joseph Charles &
Associates as a financial consultant for a period of two years, commencing on
February 10, 1997 for a fee of $3,000 per month. The Company agreed under the
underwriting agreement to sell Joseph Charles & Associates for $100, options
to purchase up to 100,000 shares of common stock. Those options are
exercisable for four years beginning on February 10, 1998 and at an exercise
price of $7.38 per share.
The Company also entered into an engagement letter with Joseph Charles &
Associates to assist the Company to complete an offering of up to 600,000
units, with each unit consisting of one share of common stock and one warrant.
The offering price of the units was $4.50 per unit. In consideration for its
services, the Company agreed to pay Joseph Charles & Associates a sales
commission of 10% of the funds raised in the offering. Joseph Charles &
Associates also was entitled to purchase a number of units equal to 10% of the
units sold in the offering for a period of five years from the date of closing
of the offering at a purchase price of $4.50 per unit. Joseph Charles &
Associates also was entitled to receive a 3% non-accountable expense allowance
based on all funds raised in the offering. That offering was closed during
April 1998 with an aggregate of 594,500 units being sold to investors and
59,450 units being sold to Joseph Charles & Associates and its designees.
On February 16, 1998 the Company entered into an agreement with Joseph
Charles & Associates to engage it on an exclusive basis to complete the
private placement that was started in November 1997 and the Company issued a
total of 250,000 options to Joseph Charles & Associates and its designees.
Those options are exercisable at $3.50 per share and expire on February 15,
2003.
The Company entered into an agreement with Bathgate McColley Capital
Group LLC on December 21, 1998, pursuant to which Bathgate McColley will
provide financial and investment banking services to the Company on a non-
exclusive basis. James Hosch, a director of the Company, is an independent
representative for Bathgate McColley.
On December 28, 1998, the Company issued a total of 250,000 shares of its
common stock to the shareholders of CarWizard, Inc. and LeaseSource Online,
Inc. in exchange for all of their ownership interests of those companies. The
Company also issued options to purchase 83,334 shares of its common stock to
Michael Kranitz as part of that transaction. Those options are exercisable at
$5.08 per share for a five year period commencing on December 28, 1998. Mr.
Kranitz was an executive officer and principal owner of LeaseSource Online,
Inc. and CarWizard, Inc.
Although some of the foregoing transactions were determined without arm's
length negotiations and involved conflicts of interest between the interests
of the related parties and the Company, the Company believes that all of these
transactions were entered into on terms no less favorable to the Company than
could have been obtained from independent third parties.
OTHER MATTERS TO BE VOTED UPON
Stock Option Plan
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Company's Stock Option Plan (the "Stock Option Plan") to
increase from 1,000,000 to 2,000,000 the number of shares of the Company's
common stock issuable pursuant to options granted under the Stock Option Plan.
The Stock Option Plan allows for the granting of (i) nonstatutory stock
options ("NSOs"), which can be granted to employees of the Company or any
subsidiary of the Company and non-employees (such as consultants and outside
directors) and (ii) tax-qualified incentive stock options ("ISOs"), which can
be granted only to employees of the Company or any subsidiary of the Company.
A prospective grantee of an option who is an employee may elect at the date of
grant the number of options the employee prefers to receive as NSOs and as
ISOs. The purpose of the Stock Option Plan is to enhance shareholder value by
attracting, retaining and motivating key employees, consultants and members of
the Board of Directors of the Company and of any subsidiary of the Company by
providing them with a means to acquire a proprietary interest in the Company's
success. All current and former employees, consultants and members of the
Board of Directors of the Company, and of any subsidiary of the Company are
eligible to participate in the Stock Option Plan. As of December 31, 1998, 70
persons were eligible to participate in the Stock Option Plan.
The aggregate number of shares of the Company's Common Stock that may be
granted under the Stock Option Plan upon the exercise of either an NSO or ISO
is 2,000,000. At the discretion of the Board the Stock Option Plan may be
administered by a committee of two or more non-employee Directors appointed by
the Board. Optionee's under the Stock Option Plan shall be selected at the
discretion of the Board or such committee from among those eligible
participants who, in the opinion of the Board or such committee, are or were
in a position to contribute materially to the Company's continued growth and
development and to its long-term success. Subject to the provisions of the
Stock Option Plan, the Board or such committee shall have complete discretion
in determining the terms and conditions and number of options granted under
the Stock Option Plan.
Options granted under the Stock Option Plan may not have an exercise
price that is less than the market price of the Company's Common Stock on the
date of grant, and are to have a term not to exceed ten years (five years in
the case of ISOs granted to persons who beneficially own more than ten percent
of the Company's Common Stock). Unexercised options will terminate upon the
earliest to occur of (i) the date set forth in the written option agreement,
(ii) upon completion of any acquisition of the Company, (iii) upon termination
of the optionee's employment with the Company for cause or (iv) in the case of
ISOs, ninety days following the termination of the optionee's employment with
the Company other than for cause (unless termination of employment is a result
of the optionee's death or disability, in which event the option will
terminate if not exercised within one year of the optionee's termination of
employment with the Company). Nothing contained in the Stock Option Plan
shall be construed to give any employee or consultant any right to continued
employment or association with the Company.
Each option under the Stock Option Plan shall be evidenced by a written
option agreement that specifies the exercise price, the duration of the
option, the number of shares of stock to which the option applies, and such
vesting or exercisability restrictions and other terms and conditions which
the Board or Committee may impose.
Unless earlier terminated by the Board, the Stock Option Plan shall
terminate on September 1, 2007, after which date no options may be granted
under the Stock Option Plan. The Board may at any time terminate the Stock
Option Plan and from time to time may amend or modify the Stock Option Plan,
provided, however, that no such action of the Board, without approval of the
shareholders, may: (i) increase the total amount of Common Stock that may be
purchased through options granted under the Stock Option Plan; (ii) change the
class of employees, consultants or members of the Board eligible to receive
options under the Stock Option Plan or (iii) otherwise amend or modify the
Stock Option Plan where approval of the shareholders is required by any law or
regulation governing the Company.
The principal federal income tax consequences of the grant and exercise
of options under the Stock Option Plan are, in general, as follows:
NSOs
1. Upon the issuance of an NSO, the optionee will have no taxable
income and the Company will have no tax deduction.
2. Upon the exercise of an NSO, the optionee will realize ordinary
taxable income in an amount equal to the excess of the fair market value of
the underlying shares of stock at the time the option is exercised over the
exercise price of the option for such shares.
3. The amount of income recognized by the optionee will be deductible
by the Company as compensation in the year in which ordinary income is
recognized by the optionee by reason of exercise of the NSO, provided
applicable withholding requirements are satisfied.
4. An optionee's basis for the shares of stock acquired pursuant to the
exercise of an NSO will be the option exercise price plus any amount
recognized as ordinary income by reason of the exercise of the NSO.
5. Upon the sale of the stock acquired pursuant to the exercise of an
NSO, capital gain or loss will be realized by the optionee in the amount by
which the sales price is greater or less than the basis of such stock.
Currently such gain or loss will be long-term or short-term depending on
whether the shares were held for more than eighteen months after the option
was exercised.
ISOs
1. Upon the issuance of an ISO, the optionee will have no taxable
income and the Company will have no tax deduction.
2. The tax consequences upon the exercise of an ISO and later
disposition of the shares of stock acquired thereby depend upon whether the
optionee satisfies the holding period rule whereby the optionee must hold the
shares for more than one year after exercise and two years after the date of
issuance of the option.
3. If the optionee satisfies the holding period rule, the optionee will
not realize income upon exercise of the ISO (although the excess of the fair
market value of the shares on the date of exercise over the option price must
be included as an adjustment in computing alternative minimum taxable income)
and the Company will not be allowed an income tax deduction at any time. The
difference between the option price and the amount realized upon disposition
of the shares by the optionee will constitute a long-term capital gain or
loss, as the case may be.
4. If the optionee fails to observe the holding period rule, the
portion of any gain realized upon such disqualifying disposition of the shares
which does not exceed the excess of the fair market value at the date of
exercise over the option price will be treated as ordinary income to the
optionee, the balance of any gain or any loss will be treated as capital gain
or loss (long-term or short-term depending on whether the shares were held for
more than eighteen months after the option was exercised), and the Company
will be entitled to a deduction equal to the amount of ordinary income upon
which the optionee is taxed.
The Company has not at the present time determined who will receive
options to purchase the additional shares of Common Stock that will be
authorized for issuance under the Stock Option Plan if the proposed amendment
is approved. Approval of the proposal to amend the Stock Option Plan will
require an affirmative vote of a majority of the shares of Common Stock of the
Company represented in person or by proxy at the Annual Meeting and voting in
favor or against the proposal.
Plan Benefits
The following table sets forth information concerning options that the
Company issued to certain persons under the Stock Option Plan during the year
ended December 31, 1998. The exercise price of those options is the price of
the Company's common stock on the date of grant of the options.
<TABLE>
Number of
Aggregate Shares
Exercise Common Stock
Name Price of Covered By
and Position Options Options (1)
<S> <C> <C>
Ralph Armijo $438,000 146,000
President, Chief
Executive Officer,
and Director
Kenneth Bero $375,000 125,000
Vice President of
Sales
Harold Anderson II $122,000 50,000
Vice President
Automotive
Executive Group $1,134,000 378,000
Non-Executive $120,000 40,000
Director Group
Non-Executive Officer $3,755,000 743,500
Employee Group
</TABLE>
__________________
(1) The Company has issued options under the Stock Option Plan to purchase in
excess of one million shares of the Company's Common Stock. The Stock Option
Plan however permits option holders to acquire shares of the Company's Common
Stock upon the surrender of options without paying cash. The surrendered
options are valued at the difference between the exercise price of the options
and the price of the Common Stock underlying the options. The shares of the
Company's Common Stock underlying the options surrendered in those cashless
exercises are eligible to be issued upon the exercise of other options granted
under the Stock Option Plan. The Company believes that one million shares of
the Company's Common Stock will be sufficient to cover the options that have
previously been granted under the Stock Option Plan because it is anticipated
that almost all of the option holders will use cashless exercises of their
options to acquire shares of the Company's Common Stock.
The closing sales price of the Company's common stock on May 10, 1999 was
$9.25 as reported on the Nasdaq SmallCap Market.
The Board of Directors recommends a vote for the proposal to increase the
number of shares of Common Stock subject to the Company's Stock Option Plan.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company on or before January
21, 2000 in order to be eligible for inclusion in the Company's Proxy
Statement and form of Proxy. To be so included, a proposal must also comply
with all applicable provisions of Rule 14a-8 under the Securities Exchange Act
of 1934.
OTHER MATTERS
The Board of Directors does not know of any other matters to be brought
before the Annual Meeting. If any other matters not mentioned in this Proxy
Statement are properly brought before the Annual Meeting, the individuals
named in the enclosed proxy intend to vote such proxy in accordance with their
best judgment on such matters.
OTHER INFORMATION
It has not yet been determined whether a representative of Arthur
Andersen LLP will attend the Annual Meeting, make a statement at the Annual
Meeting or will be available to respond to appropriate questions.
By Order of the Board of Directors
RALPH ARMIJO
Chief Executive Officer, President
and Director
May __, 1999
NAVIDEC, INC.
PROXY
The undersigned shareholder of NAVIDEC, Inc., a Colorado corporation,
hereby appoints Ralph Armijo, President and Chief Executive Officer of
NAVIDEC, Inc., my proxy to attend and represent me at the annual meeting of
the shareholders of the corporation to be held on June 17, 1999 at the
Inverness Hotel and Golf Club, 200 Inverness Drive West, Englewood, Colorado
at 1:00 P.M., and at any adjournment thereof, and to vote my shares on any
matter or resolution that may come before the meeting and to take any other
action which I could personally take if present at the meeting.
1. Election of Directors: Management has nominated the seven following
persons to stand for election. You may note "for" or you may withhold your
vote from any of those persons nominated and vote "for" a person nominated by
others or write in your own nominee.
a. Ralph Armijo For ___________
Withhold ___________
b. Andrew Davis For ___________
Withhold ___________
c. Patrick Mawhinney For ___________
Withhold ___________
d. Lloyd G. Chavez, Jr. For ___________
Withhold ___________
e. Gerald A. Marroney For ___________
Withhold ___________
f. James Hosch For ___________
Withhold ___________
g. Michael Kranitz For ___________
Withhold ___________
h. Other For ___________
Withhold ___________
2. Stock Option Plan
RESOLVED, that the proposal to amend the Stock Option Plan of the
corporation is approved.
For Against Abstain
_____________ _______________ _____________
Failure to check any of these boxes for each proposal will give Ralph Armijo
the authority to vote the proxy at his discretion. This Proxy gives
authority to my proxy to vote for me on such other matters as may properly
come before this meeting.
Shares Owned: _________________
Dated: _________________
_____________________________________
Signature of Shareholder
(Sign exactly as name appears on certificate)
____________________________________
Signature if held jointly
APPENDIX
NAVIDEC, INC.
STOCK OPTION PLAN
As Adopted as of September 1, 1997
and as Amended at of February 15, 1999
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Establishment. Navidec, Inc., a Colorado corporation (the
"Company"), hereby establishes a stock option plan for employees, consultants
and members of the Board of Directors of the Company or of any subsidiary of
the Company providing material services to the Company or any subsidiary of
the Company as described herein, which shall be known as the "NAVIDEC, INC.
STOCK OPTION PLAN" (the "Plan"). The Company shall enter into stock option
agreements with recipients of options pursuant to the Plan.
1.2 Purpose. The purpose of the Plan is to enhance shareholder value
by attracting, retaining and motivating key employees, consultants and members
of the Board of Directors of the Company and of any subsidiary of the Company
by providing them with a means to acquire a proprietary interest in the
Company's success.
ARTICLE II
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall
have the respective meanings set forth below, unless the context clearly
requires otherwise, and when such meaning is intended, the term shall be
capitalized.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee provided for by Article IV hereof,
which may be created
at the discretion of the Board.
(d) "Company" means Navidec, Inc. a Colorado corporation.
"Date of Exercise" means the date the Company receives notice, by an
Optionee, of the exercise
of an Option pursuant to Section 10.1 of the
Plan. Such notice shall indicate the number of shares of Stock
the Optionee intends to acquire pursuant to exercise of the
Option.
"Employee" means any person, including an officer or director of the
Company or a Subsidiary
Corporation, who is employed by the Company or a Subsidiary Corporation.
"Fair Market Value" means the fair market value of Stock upon which an
option is granted
under the Plan, determined as follows:
(i) If the Stock is listed on a national securities
exchange or
admitted to unlisted trading privileges on such exchange, the Fair
Market Value shall be the last reported sale price of the Stock on the
composite tape of such exchange on the date of issuance of the option,
or if such day is not a normal trading day, the last trading day prior
to the date of issuance of the option, and if no such sale is made on
such day, the Fair Market Value shall be the average closing bid and
asked prices for such day on the composite tape of such exchange; or
(ii) If the Stock is not so listed or admitted to unlisted
trading privileges, the Fair Market Value shall be the mean of the last
reported bid and asked prices reported by the National Association of
Securities Dealers Quotation System (or, if not so quoted on NASDAQ, by
the National Quotation Bureau, Inc.) on the last trading day prior to
the date of issuance of the option.
(h) "Incentive Stock Option" means an Option granted under the
Plan which
is intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Code.
(i) "Nonstatutory Stock Option" means an Option granted under
the Plan
which is not intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.
(j) "Option" means the right, granted under the Plan, to
purchase Stock of
the Company at the option price for a specified period of time.
(k) "Optionee" means an Employee, consultant or member of the
Board of
Directors of the Company or of any subsidiary of the Company holding an
Option under the Plan.
(l) "Parent Corporation" shall have the meaning set forth in
Section 424(e)
of the Code with the Company being treated as the employer corporation for
purposes of this definition.
(m) "Subsidiary Corporation" shall have the meaning set forth in
Section
424(f) of the Code with the Company being treated as the employer
corporation for purposes of this definition.
(n) "Significant Shareholder" means an individual who, within
the meaning
of Section 422(b)(6) of the Code, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or of any Parent Corporation or Subsidiary Corporation of the
Company. In determining whether an individual is a Significant
Shareholder, an individual shall be treated as owning stock owned by
certain relatives of the individual and certain stock owned by corporations
in which the individual is a shareholder, partnerships in which the
individual is a partner, and estates or trusts of which the individual is a
beneficiary, all as provided in Section 424(d) of the Code.
(o) "Stock" means the Company's common stock, no par value per
share.
2.2 Gender and Number. Except when otherwise indicated by the
context, any masculine terminology when used in the Plan also shall include
the feminine gender, and the definition of any term herein in the singular
also shall include the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
All Employees, consultants and members of the Board of Directors of the
Company or of any subsidiary of the Company are eligible to participate in the
Plan and receive Options under the Plan. Optionees in the Plan shall be
selected by the Board, in its sole discretion, from among those Employees,
consultants and members of the Board of Directors who, in the opinion of the
Board, are in a position to contribute materially to the Company's continued
growth and development and to its long-term financial success.
ARTICLE IV
ADMINISTRATION
The Board shall be responsible for administering the Plan.
(a) The Board is authorized to interpret the Plan; to prescribe,
amend, and rescind rules and regulations relating to the Plan; to provide for
conditions and assurances deemed necessary or advisable to protect the
interests of the Company; and to make all other determinations necessary or
advisable for the administration of the Plan. Determinations,
interpretations, or other actions made or taken by the Board with respect to
the Plan and Options granted under the Plan shall be final and binding and
conclusive for all purposes and upon all persons.
(b) At the discretion of the Board the Plan may be administered by a
Committee of two or more non-employee Directors appointed by the Board (the
"Committee"). The Committee shall have full power and authority, subject to
the limitations of the Plan and any limitations imposed by the Board, to
construe, interpret and administer the Plan and to make determinations which
shall be final, conclusive and binding upon all persons, including any persons
having any interests in any Options which may be granted under the Plan, and,
by resolution or resolutions to provide for the creation and issuance of any
Option, to fix the terms upon which, the time or times at or within which, and
the price or prices at which any shares of Stock may be purchased from the
Company upon the exercise of an Option. Such terms, time or times and price
or prices shall, in every case, be set forth or incorporated by reference in
the instrument or instruments evidencing an Option, and shall be consistent
with the provisions of the Plan.
(c) Where a Committee has been created by the Board pursuant to this
Article IV, references in the Plan to actions to be taken by the Board shall
be deemed to refer to the Committee as well, except where limited by the Plan
or by the Board.
(d) No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
ARTICLE V
STOCK SUBJECT TO THE PLAN
5.1 Number. The total number of shares of Stock hereby made
available and reserved for issuance under the Plan upon exercise of Options
shall be two million shares. The aggregate number of shares of Stock
available under the Plan shall be subject to adjustment as provided in Section
5.3.
5.2 Unused Stock. If an Option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares of Stock
subject thereto shall (unless the Plan shall have terminated) become available
for other Options under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar capital change, the
aggregate number of shares of Stock set forth in Section 5.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive.
In any such case, the number and kind of shares of Stock that are subject to
any Option and the Option price per share shall be proportionately and
appropriately adjusted without any change in the aggregate Option price to be
paid therefor upon exercise of the Option.
ARTICLE VI
DURATION OF THE PLAN
Subject to approval of shareholders, the Plan shall be in effect for ten
years from the date of its adoption by the Board. Any Options outstanding at
the end of such period shall remain in effect in accordance with their terms.
The Plan shall terminate before the end of such period if all Stock subject to
it has been purchased pursuant to the exercise of Options granted under the
Plan.
ARTICLE VII
TYPES OF AWARDS UNDER PLAN
Awards under the Plan may consist of Options in the form of either
Nonstatutory Stock Options as described in Article VIII, or Incentive Stock
Options as described in Article IX.
ARTICLE VIII
TERMS OF NONSTATUTORY STOCK OPTIONS
8.1 Grant of Nonstatutory Stock Options. Subject to Section 5.1,
Nonstatutory Stock Options may be granted to Employees, consultants and
members of the Board of Directors at any time and from time to time as
determined by the Board. The Board shall have complete discretion in
determining the terms and conditions and number of Nonstatutory Stock Options
granted to each Optionee. In making such determinations, the Board may take
into account the nature of services rendered by such current Employees,
consultants and members of the Board, their respective present and potential
contributions to the Company or any subsidiary, and such other factors as the
Board in its discretion shall deem relevant.
8.2 Nonstatutory Option Agreement; Terms and Conditions to Apply
Unless Otherwise Specified. As determined by the Board on the date of grant,
each Nonstatutory Stock Option shall be evidenced by an option agreement (the
"Nonstatutory Stock Option Agreement") that specifies: the Nonstatutory Stock
Option exercise price; the duration of the Nonstatutory Stock Option; the
number of shares of Stock to which the Nonstatutory Stock Option applies; such
vesting or exercisability restrictions which the Board may impose; and any
other terms or conditions which the Board may impose. All such terms and
conditions shall be determined by the Board at the time of grant of the
Nonstatutory Stock Option.
(a) If not otherwise specified by the Board, the following terms
and conditions shall apply to Nonstatutory Stock Options granted under the
Plan:
(i) Term. The duration of the Nonstatutory Stock Option shall
be for ten years from the date of grant.
(ii) Exercise of Nonstatutory Stock Option. Unless a
Nonstatutory Stock Option is terminated as provided hereunder, an Optionee may
exercise a Nonstatutory Stock Option pursuant to a vesting schedule as
determined by the Board.
(iii) Termination. Each Nonstatutory Stock Option granted
pursuant to the Plan shall expire upon the earliest to occur of:
(A) The date set forth in such Nonstatutory Stock Option
Agreement, not to exceed ten years from the date of grant;
(B) The completion of the merger or sale of substantially
all of the Stock or assets of the Company with or to another company in a
transaction in which the Company is not the survivor, except
for the merger of the Company into a wholly-owned subsidiary (and the Company
shall not be considered the surviving corporation for purposes hereof if the
Company is the survivor of a reverse triangular merger), provided that the
Company shall have given the Optionee at least thirty days' prior written
notice of its intent to enter into such merger or sale; or
(C) The termination of the employment or services of an
Optionee by the Company for cause.
(iv) Nontransferability. Nonstatutory Stock Options shall not
be transferable other than by will or by the laws of descent and distribution,
and shall be exercisable during the Optionee's lifetime only by the Optionee.
(b) The Board shall be free to specify terms and conditions
other than and in addition to those set forth above, in its discretion.
(c) All Nonstatutory Stock Option Agreements shall incorporate
the provisions of the Plan by reference.
8.3 Nonstatutory Stock Option Exercise Price. No Nonstatutory Stock
Option granted pursuant to the Plan shall have a Nonstatutory Stock Option
exercise price that is less than the Fair Market Value of Stock on the date
the Nonstatutory Stock Option is granted. The Nonstatutory Stock Option
exercise price shall be subject to adjustment as provided in Section 5.3
above.
8.4 Payment. Payment for all shares of Stock shall be made at the
time that a Nonstatutory Stock Option, or any part thereof, is exercised, and
no shares shall be issued until full payment therefor has been made. Payment
shall be made (i) in cash, or (ii) if acceptable to the Board, in Stock, by
the surrender of Nonstatutory Stock Option rights hereunder valued at the
difference between the Nonstatutory Stock Option exercise price plus income
taxes to be withheld, if any, and the Fair Market Value of the Stock at the
date of exercise (referred to as "immaculate cashless exercise"), or in some
other form.
ARTICLE IX
TERMS OF INCENTIVE STOCK OPTIONS
9.1 Grant of Incentive Options. Subject to Section 5.1, Incentive
Stock Options may be granted to Employees at any time and from time to time as
determined by the Board. The Board shall have complete discretion in
determining the terms and conditions and number of Incentive Stock Options
granted to each Optionee. In making such determinations, the Board may take
into account the nature of services rendered by such Employees, their
respective present and potential contributions to the Company or any
subsidiary, and such other factors as the Board in its discretion shall deem
relevant.
(a) The total Fair Market Value (determined at the date of grant)
of shares of Stock with respect to which Incentive Stock Options granted are
exercisable for the first time by the Optionee during any calendar year under
all plans of the Company under which incentive stock options may be granted
(and all such plans of any Parent Corporation and any Subsidiary Corporations
of the Company) shall not exceed $100,000. Hereinafter, this requirement is
sometimes referred to as the "$100,000 Limitation".
(b) The Board is expressly given the authority to issue amended or
replacement Incentive Stock Options with respect to shares of Stock subject to
an Incentive Stock Option previously granted hereunder. An amended Incentive
Stock Option amends the terms of an Incentive Stock Option previously granted
and thereby supersedes the previous Incentive Stock Option. A replacement
Incentive Stock Option is similar to a new Incentive Stock Option granted
hereunder except that it provides that it shall be forfeited to the extent
that a previously granted Incentive Stock Option is exercised, or except that
its issuance is conditioned upon the termination of a previously granted
Incentive Stock Option.
9.2 No Tandem Options. Where an Option granted under the Plan is
intended to be an Incentive Stock Option, the Incentive Stock Option shall not
contain terms pursuant to which the exercise of the Incentive Stock Option
would affect the Optionee's right to exercise another Nonstatutory Stock
Option, or vice versa, such that the Option intended to be an Incentive Stock
Option would be deemed a tandem stock option within the meaning of the
regulations under Section 422 of the Code.
9.3 Incentive Stock Option Agreement; Terms and Conditions to Apply
Unless Otherwise Specified. As determined by the Board on the date of grant,
each Incentive Stock Option shall be evidenced by an Incentive Stock Option
agreement (the "Incentive Stock Option Agreement") that includes the
nontransferability provisions required by Section 9.7 hereof and that
specifies: the Incentive Stock Option exercise price; the duration of the
Incentive Stock Option; the number of shares of Stock to which the Incentive
Stock Option applies; such vesting or exercisability restrictions which the
Board may impose; a provision implementing the $100,000 Limitation; and any
other terms or conditions which the Board may impose. All such terms and
conditions shall be determined by the Board at the time of grant of the
Incentive Stock Option.
(a) If not otherwise specified by the Board, the following terms
and conditions shall apply to Incentive Stock Options granted under the Plan:
(i) Term. The duration of the Incentive Stock Option shall be
for ten years from the date of grant.
(ii) Exercise of Incentive Stock Option. Unless an Incentive
Stock Option is terminated as provided hereunder, an Optionee may exercise an
Incentive Stock Option pursuant to a vesting schedule as determined by the
Board.
(iii) Termination. Each Incentive Stock Option granted pursuant
to the Plan shall expire upon the earliest to occur of:
(A) The date set forth in such Incentive Stock Option
Agreement, not to exceed ten years from the date of grant (five years in the
case of a Significant Shareholder);
(B) The completion of the merger or sale of substantially
all of the Stock or assets of the Company with or to another company in a
transaction in which the Company is not the survivor, except for the merger of
the Company into a wholly-owned subsidiary (and the Company shall not be
considered the surviving corporation for purposes hereof if the Company is the
survivor of a reverse triangular merger), provided that the Company shall have
given the Optionee at least thirty days' prior written notice of its
intent to enter into such merger or sale;
(C) Ninety days following the termination of the
employment of an Optionee, except for termination for cause by the Company or
termination because of the Optionee's death or disability
(in which event of termination of employment due to the Optionee's death or
disability, the Option shall expire one year following the termination of
employment of an Optionee); or
(D) Immediately upon the termination of the employment of
an Optionee by the Company for cause.
(b) The Board shall be free to specify terms and conditions other
than and in addition to those set forth above, in its discretion.
(c) All Incentive Stock Option Agreements shall incorporate the
provisions of the Plan by reference.
9.4 Incentive Stock Option Exercise Price. No Incentive Stock Option
granted pursuant to the Plan shall have an Incentive Stock Option exercise
price that is less than the Fair Market Value of Stock on the date the
Incentive Stock Option is granted. Incentive Stock Options granted to
Significant Shareholders shall have an Incentive Stock Option exercise price
of not less than 110% of the Fair Market Value of Stock on the date of grant.
The Incentive Stock Option exercise price shall be subject to adjustment as
provided in Section 5.3 above.
9.5 Payment. Payment for all shares of Stock shall be made at the
time that an Incentive Stock Option, or any part thereof, is exercised, and no
shares shall be issued until full payment therefor has been made. Payment
shall be made (i) in cash, or (ii) if acceptable to the Board, in Stock or in
some other form; provided however, that such other form of payment does not
prevent the Option from qualifying for treatment as an "incentive stock
option" within the meaning of the Code.
9.6 Termination of Employment or Services.
(a) Death or Disability. Subject to any prior partial exercise
of the Incentive Stock Option, if an Optionee's employment terminates by
reason of the Optionee's death or permanent and total disability, the
Incentive Stock Option may be exercised up to one hundred percent of the
shares originally subject to the Incentive Stock Option at any time prior to
the expiration date of the Incentive Stock Option or within 12 months after
the date of such death or disability, whichever period is the shorter, by the
person or persons entitled to do so under the Optionee's will or, if the
Optionee shall fail to make a testamentary disposition of an Incentive Stock
Option or shall die intestate, the Optionee's legal representative or
representatives.
(b) Termination other than for Cause or Due to Death. In the
event of an Optionee's termination of employment other than by the Company for
cause or by reason of death or permanent and total disability, the Optionee
may exercise such portion of his Incentive Stock Option as was vested and
exercisable by him at the date of such termination (the "Termination Date") at
any time within ninety days of the Termination Date. In any event, the
Incentive Stock Option cannot be exercised after the expiration of the term of
the Incentive Stock Option. Incentive Stock Options not exercised within the
applicable period specified above shall terminate.
(i) In the case of an Employee, a change of duties or position
within the Company or an assignment of employment in a Subsidiary Corporation
or Parent Corporation of the Company, if any, or from such a Corporation to
the Company, shall not be considered a termination of employment for purposes
of the Plan.
(ii) The Incentive Stock Option Agreements may contain such
provisions as the Board shall approve with reference to the effect of approved
leaves of absence upon termination of employment.
9.7 Nontransferability. All Incentive Stock Options granted under
the Plan shall be nontransferable by the Optionee, other than by will or the
laws of descent and distribution, and shall be exercisable during the
Optionee's lifetime only by the Optionee.
9.8 Optionee-Employee's Transfer or Leave of Absence. For purposes
of the Plan:
(a) A transfer of an Optionee who is an Employee from the Company
to a Subsidiary Corporation or Parent Corporation, or from one such
Corporation to another, or
(b) A leave of absence for such an Optionee (i) which is duly
authorized in writing by the Company or a Subsidiary Corporation, and (ii) if
the Optionee holds an Incentive Stock Option, which qualifies under the
applicable regulations under the Code which apply in the case of incentive
stock options, shall not be deemed a termination of employment. However,
under no circumstances may an Optionee exercise an Incentive Stock Option
during any leave of absence, unless authorized by the Board.
9.9 Compliance with Code. Incentive Stock Options granted hereunder
are intended to qualify as "incentive stock options" under Section 422 of the
Code. If any provision of the Plan is susceptible to more than one
interpretation, such interpretation shall be given thereto as is consistent
with Incentive Stock Options granted under the Plan being treated as incentive
stock options under the Code.
ARTICLE X
WRITTEN NOTICE, ISSUANCE OF STOCK
CERTIFICATES, SHAREHOLDER PRIVILEGES
10.1 Written Notice. An Optionee wishing to exercise an Option shall
give written notice to the Company, in the form and manner prescribed by the
Board. Full payment for the shares of Stock to be acquired pursuant to the
exercise of the Option must accompany the written notice.
10.2 Issuance of Stock Certificates. As soon as practicable after
the receipt of written notice and payment, the Company shall deliver to the
Optionee a certificate or certificates for the requisite number of shares of
Stock.
10.3 Privileges of a Shareholder. An Optionee or any other person
entitled to exercise an Option under an option agreement shall not have
shareholder privileges with respect to any Stock covered by the Option until
the date of issuance of a stock certificate for such Stock.
ARTICLE XI
TERMINATION OF EMPLOYMENT OR SERVICES FOR CAUSE
In the event of an Optionee's termination of employment or services,
which termination is by the Company or a Subsidiary Corporation for cause, any
Option or Options held by him under the Plan, to the extent not exercised
before such termination, shall terminate upon notice of termination for cause.
ARTICLE XII
RIGHTS OF OPTIONEES
Nothing in the Plan shall interfere with or limit in any way the right of
the Company or a Subsidiary Corporation to terminate any Employee's employment
at any time, nor confer upon any Employee any right to continue in the employ
of the Company or a Subsidiary Corporation.
ARTICLE XIII
AMENDMENT, MODIFICATION, AND
TERMINATION OF THE PLAN
(a) The Board may at any time terminate and from time to time
may amend or modify the Plan, provided, however, that no such action of the
Board, without approval of the shareholders, may:
(i) increase the total amount of Stock which may be purchased
through Options granted under the Plan, except as provided in Article V;
change the class of employees, consultants or members of the Board of
Directors eligible to receive Options; or otherwise amend or modify the Plan
where approval of the shareholders is required by any law or regulation
governing the Company.
(b) No amendment, modification, or termination of the Plan shall
in any manner adversely affect any outstanding Option under the Plan without
the consent of the Optionee holding the Option.
ARTICLE XIV
ACQUISITION, MERGER OR LIQUIDATION
14.1 Acquisition.
(a) In the event that an acquisition occurs with respect to the
Company, the Company shall have the option, but not the obligation, to cancel
Options outstanding as of the effective date of such acquisition, whether or
not such Options are then exercisable, in return for payment to the Optionees
of an amount equal to a reasonable estimate of an amount (hereinafter the
"Spread"), determined by the Board, equal to the difference between the net
amount per share payable in the acquisition or as a result of the acquisition,
less the exercise price of the Option. In estimating the Spread, appropriate
adjustments to give effect to the existence of the Options shall be made, such
as deeming the Options to have been exercised, with the Company receiving the
exercise price payable thereunder, and treating the shares receivable upon
exercise of the Options as being outstanding in determining the net amount per
share.
(b) For purposes of this section, an "acquisition" shall mean any
transaction in which substantially all of the Company's assets are acquired or
in which a controlling amount of the Company's outstanding shares are
acquired, in each case by a single person or entity or an affiliated group of
persons and entities. For purposes of this section, a controlling amount
shall mean more than 50% of the issued and outstanding shares of Stock of the
Company. The Company shall have the above option to cancel Options regardless
of how the acquisition is effectuated, whether by direct purchase, through a
merger or similar corporate transaction, or otherwise. In cases where the
acquisition consists of the acquisition of assets of the Company, the net
amount per share shall be calculated on the basis of the net amount receivable
with respect to shares upon a distribution and liquidation by the Company
after giving effect to expenses and charges, including but not limited to
taxes, payable by the Company before the liquidation can be completed.
(c) Where the Company does not exercise its option under this
Section 14.1 the remaining provisions of this Article XIV shall apply, to the
extent applicable.
14.2 Merger or Consolidation. If the Company shall be the surviving
corporation in any merger or consolidation, any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of
shares of Stock subject to the Option would have been entitled in such merger
or consolidation, provided that the Company shall not be considered the
surviving corporation for purposes hereof if the Company is the survivor of a
reverse triangular merger.
14.3 Other Transactions. A dissolution or a liquidation of the
Company or a merger and consolidation in which the Company is not the
surviving corporation (the Company shall not be considered the surviving
corporation for purposes hereof if the Company is the survivor of a reverse
triangular merger) shall cause every Option outstanding hereunder to terminate
as of the effective date of such dissolution, liquidation, merger or
consolidation. However, the Optionee either (i) shall be offered a firm
commitment whereby the resulting or surviving corporation in a merger or
consolidation will tender to the Optionee an option (the "Substitute Option")
to purchase its shares on terms and conditions both as to number of shares and
otherwise, which will substantially preserve to the Optionee the rights and
benefits of the Option outstanding hereunder granted by the Company, or (ii)
shall have the right immediately prior to such dissolution, liquidation,
merger, or consolidation to exercise any unexercised Options, whether or not
then vested, subject to the provisions of the Plan. The Board shall have
absolute and uncontrolled discretion to determine whether the Optionee has
been offered a firm commitment and whether the tendered Substitute Option will
substantially preserve to the Optionee the rights and benefits of the Option
outstanding hereunder. In any event, any Substitute Option for an Incentive
Stock Option shall comply with the requirements of Section 424(a) of the Code.
ARTICLE XV
SECURITIES REGISTRATION
15.1 Securities Registration. In the event that the Company shall
deem it necessary or desirable to register under the Securities Act of 1933,
as amended, or any other applicable statute, any Options or any Stock with
respect to which an Option may be or shall have been granted or exercised, or
to qualify any such Options or Stock under the Securities Act of 1933, as
amended, or any other statute, then the Optionee shall cooperate with the
Company and take such action as is necessary to permit registration or
qualification of such Options or Stock.
15.2 Representation. Unless the Company has determined that the
following representation is unnecessary, each person exercising an Option
under the Plan may be required by the Company, as a condition to the issuance
of the shares pursuant to exercise of the Option, to make a representation in
writing (i) that he is acquiring such shares for his own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof within the meaning of the Securities Act of
1933, and (ii) that before any transfer in connection with the resale of such
shares, he will obtain the written opinion of counsel for the Company, or
other counsel acceptable to the Company, that such shares may be transferred
without registration thereof. The Company may also require that the
certificates representing such shares contain legends reflecting the
foregoing. To the extent permitted by law, including the Securities Act of
1933, nothing herein shall restrict the right of a person exercising an Option
to sell the shares received in an open market transaction.
ARTICLE XVI
TAX WITHHOLDING
Whenever shares of Stock are to be issued in satisfaction of Options
exercised under the Plan, the Company shall have the power to require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements, if any.
ARTICLE XVII
INDEMNIFICATION
To the extent permitted by law, each person who is or shall have been a
member of the Board or the Committee shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of
judgment in any such action, suit, or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under
the Company's articles of incorporation or bylaws, as a matter of law, or
otherwise, or any power that the Company or any Subsidiary Corporation may
have to indemnify them or hold them harmless.
ARTICLE XVIII
REQUIREMENTS OF LAW
18.1 Requirements of Law. The granting of Options and the issuance
of shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
18.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
Colorado.
ARTICLE XIX
EFFECTIVE DATE OF PLAN
The Plan shall be effective on September 1, 1997.
ARTICLE XX
NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the holder thereof
to exercise such Option.
ARTICLE XXI
SHAREHOLDER APPROVAL
The Plan shall be submitted for approval and ratification by a vote of the
holders of a majority of the shares of Stock of the Company no later than 12
months after the date the Plan is adopted; provided, however, that failure to
timely obtain such shareholder approval shall result in all Incentive Stock
Options granted hereunder being deemed to be Nonstatutory Stock Options and
shall not affect the validity of any Option issued under the Plan.
THIS STOCK OPTION PLAN was adopted by the Board of Directors of Navidec, Inc.
on September 1, 1997, to be effective upon adoption.
NAVIDEC, INC.
By:____________________________________
Title:_________________________________
