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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
AUDIOHIGHWAY.COM
- --------------------------------------------------------------------------------
(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:
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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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(3) Filing Party:
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(4) Date Filed:
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AUDIOHIGHWAY.COM
20600 MARIANI AVENUE
CUPERTINO, CALIFORNIA 95014
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS--OCTOBER 21, 1999
---------------------
TO THE SHAREHOLDERS OF AUDIOHIGHWAY.COM:
Notice is hereby given that the Annual Meeting of Shareholders of
audiohighway.com will be held on Thursday, October 21, 1999, at 10:00 a.m.
California time, at the Doubletree Hotel, 2050 Gateway Place, San Jose,
California, for the following purposes:
1. To elect a board of six directors, with each director so elected to hold
office until the next Annual Meeting and until his successor has been
elected and qualified.
2. To approve an amendment to the Company's 1996 Stock Option Plan
authorizing an increase of approximately 1,440,000 in the number of
shares of Company common stock available for grant of options to
employees, directors and consultants of the Company.
3. To approve an amendment to the Company's 1996 Stock Option Plan to
provide for automatic grants of options to non-employee directors.
4. To ratify the appointment of Grant Thornton, LLP, as the independent
public accountants of the Company for the fiscal year ending December 31,
1999.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. August 23, 1999 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting and any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
[LOGO]
SECRETARY
Cupertino, California
September 27, 1999
<PAGE>
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS OF
AUDIOHIGHWAY.COM
TO BE HELD ON OCTOBER 21, 1999
---------------------
SOLICITATION AND VOTING RIGHTS
GENERAL
The enclosed proxy is solicited by and on behalf of audiohighway.com (the
"Company") for use at the Annual Meeting of Shareholders to be held on Tuesday,
October 21, 1999, at 10:00 A.M., California time, or at any adjournment or
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Shareholders. The Annual Meeting will be held at the
Doubletree Hotel, 2050 Gateway Place, San Jose, California. All expenses
incurred in connection with this solicitation, including postage, printing,
handling and the actual expenses incurred by brokerage houses, custodians,
nominees and fiduciaries in forwarding proxy material to beneficial owners, will
be paid by the Company. In addition to solicitation by mail, certain officers,
directors and regular employees of the Company, who will receive no additional
compensation for their services, may solicit proxies by telephone, telegram or
personal call. These proxy solicitation materials are being mailed on or about
September 27, 1999, to all shareholders entitled to vote at the Annual Meeting.
The Company's principal executive offices are located at 20600 Mariani
Avenue, Cupertino, California 95014 and its telephone number is (408) 255-5301.
REPORT TO SHAREHOLDERS
The Company's Annual Report on Form 10-KSB for the year ended December 31,
1998 is being mailed with this Proxy Statement to each of the Company's
shareholders of record at the close of business on August 23, 1999. The report
includes financial statements reported upon by Grant Thornton LLP, independent
auditors for the Company.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's Annual Meeting to be held in 2000 must be
received by the Company no later than May 27, 2000, in order that they may be
included in the Proxy Statement and form of proxy relating to that meeting. It
is recommended that shareholders submitting proposals direct them to the
Secretary of the Company and use "certified mail--return receipt requested" in
order to provide proof of timely delivery. No such proposals were received with
respect to the Annual Meeting scheduled for October 21, 1999.
VOTING OF SECURITIES
audiohighway.com, a corporation existing and organized under the laws of the
State of California, has one class of equity securities issued and outstanding,
consisting of 5,569,634 shares of common stock, no par value (the "Common
Stock"). All of the shares of Common Stock are voting shares, but only those
shareholders of record as of the record date, August 23, 1999, will be entitled
to notice of and to vote at the Annual Meeting and at any and all postponements
or adjournments of the Annual Meeting. The presence in person or by proxy of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting will constitute a quorum for the purpose of transacting
business at the Annual Meeting.
<PAGE>
Each shareholder is entitled to one vote for each share of Common Stock held
by such shareholder of record on each matter that may come before the Annual
Meeting. An affirmative vote of a majority of the shares present and voting at
the meeting is required for approval of all items being submitted to the
shareholders for their consideration, other than the election of directors,
which is determined by a plurality of the votes cast if a quorum is present and
voting. Abstentions and broker-non-votes are each included in the determination
of the number of shares present and voting for purposes of determining the
presence of a quorum. Abstentions will be included in tabulations of the votes
cast on proposals presented to the shareholders and therefore will have the
effect of a negative vote. Broker non-votes will not be counted for purposes of
determining the number of votes cast for a proposal.
Under California law, cumulative voting is permitted in the election of
directors. Under cumulative voting rules, every shareholder voting in the
election of directors may cumulate such shareholder's votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the shareholder's shares are
entitled, or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder thinks fit, provided that votes cannot be
cast for more candidates than are provided for by the Bylaws at the time of
voting. However, no shareholder will be entitled to cumulate votes unless the
name of the candidate or candidates for whom such votes would be cast has been
placed in nomination prior to the voting and any shareholder has given notice,
at the Annual Meeting and prior to the commencement of voting, of such
shareholder's intention to cumulate his votes. The candidates receiving the
highest number of votes, up to the number of directors to be elected, shall be
elected.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker "non-votes."
REVOCABILITY OF PROXIES
At the Annual Meeting, valid proxies will be voted as specified by the
shareholder. Any shareholder giving a proxy in the accompanying form retains the
power to revoke at any time prior to the exercise of the powers conferred in the
proxy and may do so by taking any of the following actions: (i) delivering
written notice to the Secretary of the Company; (ii) delivering to the Secretary
of the Company a duly executed proxy bearing a later date; or (iii) personally
attending the Annual Meeting and revoking the proxy. A shareholder's attendance
at the Annual Meeting will not revoke the shareholder's proxy unless the
shareholder affirmatively indicates at the Annual Meeting the intention to vote
the shareholder's shares in person. Please note, however, that if shares are
held of record by a broker, bank or other nominee and the shareholder wishes to
vote at the Annual Meeting, the shareholder must obtain from the record holder a
proxy issued in the name of the shareholder.
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PROPOSAL NO. 1--ELECTION OF DIRECTORS
GENERAL
The Company will present a slate of six directors for election to the Board,
to hold office until the next annual meeting of shareholders and until their
successors are duly elected and qualified.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the nominees named below, unless one or
more of such nominees should become unavailable for election by reason of death
or other unexpected occurrence, in which event such shares will be voted for the
election of such substitute nominees as the Board of Directors may propose. In
the event additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of as many of the
nominees listed below as possible and, in such event, the specific nominees to
be voted for will be determined by the proxy holders.
VOTING REQUIREMENTS
Cumulative voting is permitted in the election of directors. See "Voting of
Securities" for a discussion of the mechanics of cumulative voting. Directors
are elected by a plurality of the votes present and in person or represented by
proxy and entitled to vote on the proposal. Votes withheld from the nominee will
be counted for purposes of determining the presence or absence of a quorum but
will not be counted as affirmative votes. A broker non-vote will be counted for
purposes of determining the presence or absence of a quorum but will not be
treated as entitled to vote on this matter.
NOMINEES
The Board of Directors has nominated six persons for election to the Board
of Directors. There will be no vacancies following the election. All nominees
are currently directors of the Company whose present terms expire at the Annual
Meeting.
Set forth below is information regarding the nominees, including information
furnished by them as to their principal occupations for the last five years,
certain other directorships held by them, and their ages as of August 23, 1999.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION--POSITIONS
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Nathan M. Schulhof........................ 50 President, Chief Executive Officer and Director
Grant Jasmin(1)........................... 47 Executive Vice President, Chief Operating Officer, Vice
President Finance, Secretary and Director
Robert S. Leff............................ 52 Director
Lee M. Gammill(2)......................... 62 Director
Muninderpal Rehki(1)(2)................... 49 Director
Marvin M. Reiss........................... 54 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Mr. Schulhof is one of the founders of the Company and has served as Chief
Executive Officer, President and a director since the Company's inception in
June 1994. Mr. Schulhof received a Bachelor of Arts degree in English from the
University of Wisconsin.
Mr. Jasmin is one of the founders of the Company and has served as Executive
Vice President, Chief Operating Officer, Secretary and a director since the
Company's inception in June 1994. From June 1994 until January 1998, Mr. Jasmin
also served as the Company's Vice President, Finance. He again was
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appointed Vice President, Finance in December 1998. Mr. Jasmin received the
degree of Juris Doctor from the University of California Hastings College of the
Law, Master of Business Administration from the University of Santa Clara and a
Bachelor of Arts degree in Economics from San Jose State University.
Mr. Leff has served as a director of the Company since February 1995. Mr.
Leff has served as an independent financial consultant since December 1994.
Prior thereto, Mr. Leff was a founder of Softsel, Inc., the predecessor to
Merisel, Inc., a publicly-held company, where he served as Co-Chairman of the
Board for more than five years until December 1994. Merisel is one of the
world's largest distributors of microcomputer hardware and software and
associated products. Mr. Leff also serves on the board of directors of PC
Service Source, Inc., a provider of logistic services to the personal computer
hardware repair industry. Mr. Leff holds both a Master of Science degree and a
Bachelor of Science degree from the State University of New York at Albany.
Mr. Gammill has served as a director of the Company since November 1997.
Since May 1997, Mr. Gammill has served as Chief Executive Officer of The Gammill
Group, a consultant to the insurance and financial industry. In May 1997, Mr.
Gammill retired from a 40 year career with New York Life Insurance Company where
he served as Vice Chairman of the Board of Directors. Mr. Gammill also serves on
the board of directors of Guarantee Life Insurance Company, Omaha Nebraska, and
is a trustee of the American College, Bryn Mawr, Pennsylvania. Mr. Gammill
received a Bachelor of Arts degree in Business Administration from Dartmouth
College.
Mr. Rehki has served as a director of the Company since April 1998. From
January 1998 until August 1999, Mr. Rehki served as Chief Executive Officer of
TDP, Inc., a high technology software consulting firm, since January 1998. From
October 1997 to January 1998, he was Chief Executive Officer of TransWeb, a
software consulting firm to the medical industry. TransWeb is a wholly-owned
subsidiary of CyberPlus, an Internet-based software medical support company in
which Mr. Rehki served as Chief Executive Officer and a director from February
1996 to October 1997. From December 1993 to January 1996, Mr. Rehki was Vice
President of Operations for Intellimatch, Inc., an Internet-based human
resources company. Mr. Rehki received a Bachelor of Arts degree in Economics and
a Master of Arts degree in Economics from Christ Church College, India.
Mr. Reiss has served as a director of the Company since October 1998. For
more than the past five years, Mr. Reiss has been Chairman and Chief Executive
Officer of The Rebot Corporation, a record company that produces, manufactures
and distributes recorded music under various labels including Arabesque
Recordings. Mr. Reiss received the degrees of Master of Business Administration,
Master of International Affairs and Master of Arts in Sociology from Columbia
University, Bachelor of Law degree from Brooklyn Law School, Master of Science
degree in Physiology from the Fairleigh Dickenson Dental School, Master of
Science degree in Microbiology from Marquette University School of Medicine and
Bachelor of Arts degree in Biology from Yeshiva University.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The six individuals set forth under the caption "Nominees" have been
nominated by the Board of Directors for election at the Annual Meeting. Each
nominee for director has indicated that he is willing to serve as a director if
elected. However, if a nominee should become unable to serve or for good cause
will not serve, the persons named on the enclosed proxy card will vote for such
other nominees and substituted nominees as designated by the Board of Directors.
The Board of Directors recommends that the shareholders elect the foregoing
nominees to serve as directors of the Company until the next Annual Meeting or
until their successors have been elected and qualified.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors has two standing committees: The Compensation
Committee and the Audit Committee. The Board does not have a nominating
committee. Each standing committee has at least one
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outside director. The Board has delegated certain advisory authority to each
committee, but the decision making and management responsibilities of the
Company remain with the full board.
The Audit Committee was established to recommend engagement of the Company's
independent public accountants, to approve services performed by such
accountants and to review, in consultation with the independent accountants, the
Company's accounting system and system of internal controls. The Audit Committee
met one time during the year ended December 31, 1998.
The Compensation Committee was established to administer the Company's stock
option plans and other employee benefit plans and to approve salaries, bonuses
and other compensation arrangements for the Company's executive officers. The
Compensation Committee met five times during the year ended December 31, 1998.
The Board of Directors is responsible for the general supervision,
management and control of the Company's business. During the year ended December
31, 1998, the Board of Directors held five meetings. No member of the Board
attended fewer than 75% of the meetings in the year ended December 31, 1998.
EXECUTIVE OFFICERS
The names of the Company's executive officers who are not also directors of
the Company and certain information about each of them are set forth below:
Gregory Sutyak, aged 44, has served as Chief Financial Officer since January
1998. From January 1995 through December 1997, Mr. Sutyak served as a consultant
to the Company performing financial services. From March 1996 through December
1997, Mr. Sutyak was an independent consultant. From May 1993 through February
1996, Mr. Sutyak was Chief Financial Officer for TestDrive Corporation, a
distributor of computer software on CD-ROM. Mr. Sutyak received a Bachelor of
Arts degree in Economics from the University of Pittsburgh and a Masters of
Business Administration degree from the University of San Francisco.
Marc Baum, aged 35, has served as Vice President, Product Development since
April 1998. From May 1996 through March 1998, Mr. Baum was Vice President of
Paragon Technology Corporation, a network company providing software and
consulting services to the financial, insurance and retail industries. From
March 1992 through April 1996, Mr. Baum was Director of Network Systems Products
for U.S. Robotics, a manufacturer of network and Internet connectivity products.
Mr. Baum received a Bachelor of Science degree in Computer Engineer from the
University of Illinois.
Theodore Richards, aged 51, has served as Vice President and Creative
Director since July 1996. From November 1994 to July 1996, Mr. Richards was Vice
President of User Interface Design and Creative Director for SoftAd, a firm
specializing in the design and implementation of sales force automation and
integrated client-server-based Web sites. Mr. Richards received a Bachelor of
Arts degree in Creative Writing from San Francisco State University.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the General Corporation Law of California (the "Corporations
Code"), the Company's Articles of Incorporation eliminate, to the fullest extent
permitted under California law, the personal liability of a director to the
Company for monetary damages in an action brought by or in the right of the
Company for breach of a director's duties to the Company and its shareholders.
Under current California law, liability is not eliminated for (i) acts or
omissions that involve intentional misconduct or a knowing and culpable
violation of law; (ii) acts or omissions that a director believed to be contrary
to the best interest of the corporation or its shareholders or that involve the
absence of good faith on the part of the director; (iii) any transaction from
which a director derived an improper personal benefit; (iv) acts or omissions
that show a reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of
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performing a director's duties, of a risk of serious injury to the corporation
or its shareholders; (v) acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders; (vi) contracts or other transactions between
corporations and directors having interrelated directors in violation of Section
310 of the Corporations Code; and (vii) distributions, loans or guarantees made
in violation of Section 316 of the Corporations Code. In addition, the Company's
Articles of Incorporation and Bylaws provide for indemnification, to the fullest
extent permitted under the Corporations Code, of directors, officers and agents
of the Company and persons who serve at the request of the Company as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
The Company has also entered into indemnification agreements with its
directors and executive officers, as permitted under the Bylaws. The
indemnification agreements provide that the directors and executive officers
will be indemnified to the fullest extent permitted by applicable law against
all expenses (including attorneys' fees), judgments, fines and amounts
reasonably paid or incurred by them for settlement in any threatened, pending or
completed action, suit or proceeding, including any derivative action, on
account of their services as a director or executive officer of the Company of
any subsidiary of the Company or of any other company or enterprise in which
they are serving at the request of the Company. No indemnification will be
provided under the indemnification agreements, however, to any director or
executive officer in certain limited circumstances, including knowingly
fraudulent, deliberately dishonest or willful misconduct. To the extent the
provisions of the indemnification agreements exceed the indemnification
permitted by applicable law, such provisions may be unenforceable or may be
limited to the extent they are found by a court of competent jurisdiction to be
contrary to public policy. In addition, in the opinion of the Securities and
Exchange Commission, indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), is against public policy and,
therefore, unenforceable. Accordingly, these indemnification provisions may not
limit the liability of directors and executive officers under the Act.
6
<PAGE>
PROPOSALS NO. 2 AND 3--
AMENDMENTS TO THE 1996 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER AND TO PROVIDE FOR AUTOMATIC OPTION
GRANTS TO NON-EMPLOYEE DIRECTORS
INTRODUCTION
The Board has adopted a number of amendments to the 1996 Stock Option Plan
(the "1996 Option Plan"). Two of the amendments, an increase by approximately
1.44 million in the number of shares of Common Stock reserved for issuance under
the 1996 Option Plan and the addition of provisions relating to automatic
options grants to non-employee directors, require shareholder approval. The
Plan, as amended, is described below.
As of September 1, 1999, approximately 5.6 million shares of Common Stock
were outstanding, and an aggregate of approximately 360,000 shares of Common
Stock were reserved and available for issuance under audiohighway.com's 1996
incentive stock option plan. Assuming the shareholders approve the addition of
approximately 1.44 million shares of Common Stock to the Plan, this aggregate
number would increase to 1.8 million shares--equal to approximately 25% of the
total number of shares of Common Stock that would be outstanding on a
fully-diluted basis as of September 1, 1999.
The Board has determined that due in part to the relatively small number of
shares remaining for issuance under the 1996 Option Plan, the Plan no longer
provides a sufficient mechanism to compensate key employees, consultants, and
directors and to provide appropriate long-term incentives for continued service
to audiohighway.com. The terms of the Plan are restrictive and inflexible when
compared to the terms of comparable stock option plans available to key
employees, consultants, and directors of competing companies. The Board believes
that its amendments to the Plan will permit a more flexible approach to and
administration of purchases of Common Stock by its key employees, consultants,
and directors. Accordingly, the Board believes that the amended 1996 Option Plan
reflects the best interests of audiohighway.com and recommends that at the
annual meeting, the shareholders approve the addition of shares and the other
amendments submitted for shareholder approval.
PURPOSE
The Board adopted extensive amendments to the 1996 Option Plan as part of
its policy to further the long-term growth in audiohighway.com's earnings by
providing incentives to key employees, consultants, and directors who are or
will be responsible for such growth; to facilitate the ownership of
audiohighway.com's stock by such individuals, thereby increasing the identity of
their interests with those of audiohighway.com's shareholders; and to assist
audiohighway.com in attracting and retaining employees with experience and
ability by offering an employee stock option plan with terms both attractive and
competitive when compared with the terms of comparable plans offered by
companies competing with audiohighway.com in the work force.
THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The Amended and Restated 1996 Option Plan (the "1996 Option Plan") allows
audiohighway.com employees (including officers and directors who are also
employees), consultants, and directors to purchase Common Stock on the terms
described below.
PLAN ADMINISTRATION. The 1996 Option Plan is administered by the Board
and/or a committee thereof appointed by the Board (in either case, the
"Administrator"), whose administration, interpretation and application of the
Plan and its terms are final, conclusive, and binding on all optionees.
SECURITIES SUBJECT TO PLAN. Under the proposed amendment, there will be 1.8
million authorized but unissued shares of Common Stock reserved for issuance
pursuant to exercise of options granted under the 1996 Option Plan.
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ELIGIBILITY FOR PARTICIPATION. Any audiohighway.com key employee,
consultant, or director is eligible to be granted options under the 1996 Option
Plan.
GRANT OF OPTIONS. Options granted under the 1996 Option Plan may be either
"incentive stock options" ("ISOs") or "non-statutory stock options" ("NSOs").
ISOs carry certain potential income tax benefits compared to NSOs. See "Certain
Federal Income Tax Considerations," below. The type of option granted under the
Plan and the number of shares subject to the option are determined by
Administrator upon grant of the option.
EXERCISE PRICE OF OPTIONS. In general, the exercise price of options
granted under the Plan is the fair market value of the Common Stock on the grant
date. However, if the option is an ISO and the optionee owns at least ten
percent of the outstanding voting stock of audiohighway.com or certain related
corporations, then the exercise price is at least 110% of the fair market value
on the grant date. The Plan allows NSOs to be granted to optionees at a discount
(generally not to exceed 15%) from fair market value. The exercise price is
payable in any lawful form of consideration, including cash, promissory note,
other shares of Common Stock, or combinations of the foregoing.
TERM OF OPTIONS. In general, options granted under the Plan have a term of
ten years. If the option is an ISO and the optionee owns at least ten percent of
the outstanding voting stock of audiohighway.com or certain related
corporations, the term cannot exceed five years. Following termination of
employment or other services to audiohighway.com, unless the Administrator
determines otherwise, an option may generally be exercised only to the extent it
was exercisable on the termination date and only for a limited period: three
months if termination is not due to disability or death, six months if
termination is due to disability that is not total and permanent or is due to
death and 12 months if termination is due to total and permanent disability.
ABILITY OF THE BOARD OR PLAN ADMINISTRATOR TO AMEND THE 1996 OPTION
PLAN. The Board may terminate or amend the 1996 Option Plan at any time, but
may not thereby impair the rights of any optionee without his or her prior
written consent. The Plan does not require shareholder approval of amendments,
but such approval may nonetheless be required (as is the case regarding the
amendments proposed below) for income tax purposes or by applicable stock
exchange or Nasdaq Stock Market rules.
CAPITAL CHANGES AND CHANGES IN CONTROL. In the event any change is made in
the capitalization of audiohighway.com, such as stock splits or stock dividends,
which results in an increase or decrease in the number of shares of Common Stock
outstanding without receipt of consideration by audiohighway.com, appropriate
adjustments will be made by audiohighway.com to shares subject to outstanding
options and to the purchase price per share, subject to any required action by
audiohighway.com shareholders.
In the event of a proposed liquidation or dissolution of audiohighway.com,
the Administrator is required to notify optionees at least 15 days beforehand.
To the extent an option is not exercised before the liquidation or dissolution
is consummated, the option terminates.
In the event of a proposed sale of all or substantially all of
audiohighway.com's assets, or if audiohighway.com merges with another
corporation (and due to the merger, the audiohighway.com shareholders
immediately before the merger own less than 50% of the voting power in the
surviving corporation or its parent immediately after the merger) the 1996
Option Plan provides that each outstanding option will be assumed or an
equivalent right will be substituted by the successor or surviving corporation;
otherwise, the Plan provides that, at the discretion of the Administrator, all
outstanding options that are otherwise unvested in whole or part will become
fully exercisable immediately before the merger becomes effective.
NONASSIGNABILITY. No option granted under the 1996 Option Plan may be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or the laws of descent and distribution, and any attempt to do so
may be treated by audiohighway.com as a termination of the option. Options
granted under the Plan may be exercised during the lifetime of the optionee only
by the optionee.
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BUY-OUTS. The 1996 Option Plan allows audiohighway.com to offer to buy any
outstanding option for cash or shares of Common stock. The optionee is not
obligated to accept any such offer.
AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS. The 1996 Option Plan presently
permits grants of options to non-employee directors of audiohighway.com in
amounts determined by the Administrator. Many companies make these grants
automatically. In recognition of their service and value to audiohighway.com,
the proposed amendment provides for an automatic grant of an option covering
75,000 shares to each present non-employee member of the Board, and to each
person newly elected to the Board as a non-employee director upon his or her
attendance at his or her first meeting of the Board, with an automatic grant of
an option covering 10,000 shares for each new calendar year of service on the
Board, effective upon the non-employee director's attendance at his or her first
meeting of the Board during that year.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
NSOS. An optionee does not recognize taxable income upon the grant of a NSO
under the Plan. Upon exercise, the optionee has ordinary "wage" income, subject
to withholding of income and employment taxes, in the amount of the
"spread"--the excess of the fair market value of the purchased shares over the
exercise price measured as of the date of exercise. audiohighway.com is entitled
to a deduction in the amount of ordinary income recognized by the optionee. For
purposes of determining whether capital gain upon sale of shares acquired by
exercise of a NSO is long-term or short-term, the optionee's holding period
begins with the day of exercise. Shares must be held more than one year to yield
long-term capital gain on sale. Long-term capital gains are generally subject to
lower rates of federal income tax than are ordinary income and short-term
capital gains which are generally taxable at the same rates.
ISOS. An optionee does not recognize taxable income either for "regular"
federal income tax purposes or for purposes of the alternative minimum tax
("AMT") upon the grant of an ISO. Exercise of an ISO does not yield income for
"regular" federal income tax purposes, but results in AMT income in the amount
of the "spread" on the exercise date. Sale of shares purchased by exercise of an
ISO results in long-term capital gain in the amount of the excess of the sale
proceeds over the purchase price if the ISO shares have been held more than one
year after exercise AND two years after the date the ISO was granted. In this
event, audiohighway.com is not entitled to any deduction due to the exercise of
the ISO and the sale of the ISO shares. If the optionee does not satisfy both of
the foregoing holding periods, then upon sale of the ISO shares, the optionee
recognizes ordinary income in the amount of the "spread" measured at the
exercise date (but no more than the actual gain on the sale). In this event,
audiohighway.com is entitled to a deduction in the amount of ordinary income
recognized by the optionee.
The foregoing is only a summary of the United States federal income tax
consequences of the 1996 Option Plan to optionees and audiohighway.com and does
not purport to be complete. Reference should be made to the applicable
provisions of the Internal Revenue Code. In addition, the summary does not
discuss the income tax consequences of a participant's death or the income tax
laws of any municipality, state or foreign country in which the participant may
reside, and to which the participant may be subject.
RESTRICTION ON RESALE. Certain officers and directors of the Company may be
deemed to be "affiliates" of the Company, as that term is defined under the
Securities Act. Common Stock acquired under the 1996 Option Plan by an affiliate
may only be reoffered or resold pursuant to an effective registration statement
or pursuant to Rule 144 under the Securities Act or another exemption from the
registration requirements of the Securities Act.
AMENDMENTS PRESENTED FOR SHAREHOLDER APPROVAL
The approval of audiohighway.com's shareholders is required for the
following amendments to the 1996 Option Plan:
9
<PAGE>
PROPOSAL NO. 2 ADDITION OF SHARES. Approval of an amendment to the 1996
Option Plan increasing by approximately 1.44 million the number of shares
reserved for issuance thereunder.
PROPOSAL NO. 3 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS. Approval of an
amendment to the 1996 Option Plan providing for an automatic annual grant of an
option to purchase 10,000 shares of Common Stock to each non-employee director
and an automatic grant of an option to purchase 75,000 shares of Common Stock to
each present non-employee director and each new non-employee director upon his
or her initial election to the Board.
VOTING REQUIREMENTS
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to approve the implementation of the amendments to the 1996 Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the shareholders vote FOR the
approval of the implementation of the amendments to the 1996 Plan. The Board
believes that it is in the best interests of the Company to approve an expansion
of its equity incentive program for the Company's officers, employees, Board
members and consultants in order to encourage such individuals to remain in the
Company's service and more closely align their interests with those of the
shareholders.
PROPOSAL NO. 4--RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors has selected Grant Thornton LLP as the Company's
independent auditors for the year ending December 31, 1999 and has further
directed that management submit the selection of independent auditors for
ratification by the shareholders at the Annual Meeting. Grant Thornton has
audited the Company's financial statements since 1996. Representatives of Grant
Thornton are expected to be present at the Annual Meeting and will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Shareholder ratification of the selection of Grant Thornton as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of Grant Thornton to the
shareholders for ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, the Audit Committee and the Board of
Directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee and the Board of Directors, in their
discretion, may direct the appointment of a different independent accounting
firm at any time during the year if they determine that such a change would be
in the best interest of the Company and its shareholders.
VOTING REQUIREMENTS
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Grant Thornton LLP.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the shareholders vote FOR the
ratification of Grant Thornton LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999.
10
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1999 with
respect to the shares of Common Stock beneficially owned by (i) persons known by
the Company to own more than five percent of the outstanding shares of Common
Stock; (ii) each director of the Company; (iii) the executive officers named in
the Summary Compensation Table (see "Executive Compensation") and (iv) all
directors and executive officers of the Company as a group. Ownership
information is based upon information furnished by the respective individuals.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME & ADDRESS OF DIRECTORS BENEFICIALLY
AND 5% SHAREHOLDERS(2) OWNED(1) PERCENT
- --------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Nathan M. Schulhof............................................. 314,917(3) 6.4%
Grant Jasmin................................................... 201,574(3) 4.1%
Robert S. Leff................................................. 46,738(4) *
Theodore Richards.............................................. 24,324(5) *
Lee M. Gammill................................................. 16,289(6) *
Muninderpal Rehki.............................................. 35,031(7) *
Marvin M. Reiss................................................ 70,518(8) 1.4%
All Executive Officers and Directors as a group 647,968(9)
(6 persons).................................................. 11.8%
</TABLE>
- ------------------------
* Less than 1%.
(1) Beneficial ownership of shares by directors, officers and 5% or more
shareholders includes both outstanding Common Stock and shares issuable upon
exercise of warrants or options that are currently exercisable or will be
exercisable within 60 days after the date of this table. Except as indicated
in the footnotes to this table and pursuant to applicable community property
laws, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock beneficially owned by them.
(2) The address of Messrs. Schulhof, Jasmin, Leff, Richards, Gammill, Rehki and
Reiss is c/o audiohighway.com, 20600 Mariani Avenue, Cupertino, California
95014.
(3) Includes 66,459 shares of Common Stock issuable upon exercise of outstanding
warrants and options exercisable within 60 days of March 31, 1999.
(4) Includes 29,971 shares of Common Stock issuable upon exercise of outstanding
warrants exercisable within 60 days of March 31, 1999.
(5) Includes 21,718 shares of Common Stock issuable upon exercise of outstanding
warrants exercisable within 60 days of March 31, 1999.
(6) Includes 16,289 shares of Common Stock issuable upon exercise of outstanding
warrants exercisable within 60 days of March 31, 1999.
(7) Includes 13,031 shares of Common Stock issuable upon exercise of outstanding
warrants exercisable within 60 days of March 31, 1999.
(8) Includes (i) 24,577 shares of Common Stock issuable upon exercise of
outstanding warrants exercisable within 60 days of March 31, 1999, (ii)
18,061 shares of Common Stock issuable upon conversion of currently
convertible outstanding convertible promissory notes, (iii) 11,808 shares of
Common Stock issuable upon conversion of currently convertible outstanding
convertible promissory notes held by Susan L. Reiss, Mr. Reiss' spouse, and
(iv) 6,950 shares of Common Stock issuable upon exercise of outstanding
warrants exercisable within 60 days of March 31, 1999 held by Mrs. Reiss.
11
<PAGE>
(9) Includes 275,322 shares of Common Stock issuable upon exercise of
outstanding convertible promissory notes, warrants and options convertible
or exercisable, as the case may be, within 60 days of March 31, 1999.
The Company knows of no arrangements that will result in a change in control
subsequent to the date hereof. Except as otherwise noted, the persons named in
the table have sole voting and investment power with respect to all shares shown
as beneficially owned by them, subject to community property laws, where
applicable.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a class of the Company's equity
securities registered under the Exchange Act, to file with the Commission
reports of ownership and changes in ownership of Common Stock and other equity
securities of the Company. Executive officers, directors and greater than ten
percent shareholders are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on review
of this information, including written representations that no other reports
were required, the Company believes that during the fiscal year ended December
31, 1998, each of the Company's executive officers, directors and holders of ten
percent or more of the Company's Common Stock timely filed all reports required
to be filed pursuant to Section 16(a) of the Exchange Act, except as follows:
Mr. Robert Leff, a director, inadvertently failed to list one warrant on his
Form 3, which disclosure was subsequently made on Form 5.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during the Company's fiscal year ended December 31, 1998 to the Company's
Chief Executive Officer and to each other executive officer who received salary
and bonus in excess of $100,000 in 1998 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS--
ANNUAL COMPENSATION SECURITIES
------------------------ UNDERLYING ALL OTHER
SALARY BONUS OPTIONS/SAR'S COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($$) ($$) (#) ($$)
- --------------------------------- ---- ---------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Nathan M. Schulhof .............. 1998 170,500 75,000 20,850 --
CHIEF EXECUTIVE OFFICER 1997 157,500 -- -- --
AND PRESIDENT 1996 121,950 50,000 20,850 --
Grant Jasmin .................... 1998 140,000 37,500 20,850 172,000*
EXECUTIVE VICE PRESIDENT, CHIEF 1997 108,000 -- -- --
OPERATING OFFICER AND VICE 1996 74,200 50,000 20,850 --
PRESIDENT, FINANCE
Theodore Richards ............... 1998 114,500 31,000 -- --
VICE PRESIDENT AND 1997 99,500 4,000 -- --
CREATIVE DIRECTOR 1996 46,000 -- 26,062 --
</TABLE>
- ------------------------
* Represents payroll accrued during earlier periods which was paid during
1998.
12
<PAGE>
DIRECTORS' COMPENSATION
Directors receive no fees, other than reimbursement of travel expenses, for
attendance at meetings of the Board of Directors. Historically, each director
(including employee directors) received a one-time grant of warrants to purchase
26,062 shares of Common Stock at a price equal to the fair market value on the
date of grant, which have vested over a two-year period. If the amendments to
the Company's 1996 Stock Option Plan are approved by the shareholders at the
Annual Meeting (see Proposals 2 and 3), this compensation package will change to
provide that each non-employee director will receive an automatic initial grant
of 75,000 options and an automatic annual grant of 10,000 options per year
thereafter, granted at the first meeting attended by the non-employee director
in each new year.
EMPLOYMENT AGREEMENTS
The Company presently has no formal employment agreements with any of the
Named Executive Officers.
STOCK OPTION GRANTS AND EXERCISES
As described above, the Company has adopted the 1996 Option Plan, at
present, authorizing the issuance of up to 364,869 shares of common stock
pursuant to exercise of options granted under the 1996 Option Plan. The 1996
Option Plan was adopted to promote and advance the interests of the Company and
its shareholders by (i) enabling the Company to attract, retain and reward
managerial and other key employees, non-employees and directors and (ii)
strengthening the mutuality of interests between participants in the 1996 Plan
and the shareholders of the Company in its long-term growth, profitability and
financial success by offering stock options. The amendment proposed for
shareholder approval increases the number of shares reserved for issuance under
the 1996 Option Plan to 1,800,000.
The following table sets forth information regarding grants of stock options
and other related information as of the year ended December 31, 1998 by the
executive officers named in the Summary Compensation Table:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(YEAR ENDED DECEMBER 31, 1998)
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED FISCAL YEAR BASE PRICE DATE
- --------------------------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Nathan M. Schulhof......... 20,850 12.6% $ 6.50 1/15/2008
Grant Jasmin............... 20,850 12.6 6.50 1/15/2008
Theodore Richards.......... -- -- -- --
</TABLE>
13
<PAGE>
The following table sets forth information regarding exercises of stock
options and other related information as of the year ended December 31, 1998 by
the executive officers named in the Summary Compensation Table:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS/SAR'S AT
FISCAL YEAR-END FISCAL YEAR-END
SHARES ACQUIRED VALUE EXERCISABLE / EXERCISABLE /
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ----------------- ------------- -------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Nathan M. Schulhof............................ 0 $ 0 13,031 7,819 $ 57,010(1) $ 34,208(1)
20,850 0 $ 106,648(2) $ 0(2)
Grant Jasmin.................................. 0 $ 0 13,031 7,819 $ 57,010(1) $ 34,208(1)
20,850 0 $ 106,648(2) $ 0(2)
Theodore Richards............................. 0 $ 0 21,718 4,344 $ 111,305(2) $ 22,220(2)
</TABLE>
- ------------------------
(1) Calculated as the difference between the fair market value of the Common
Stock at December 31, 1998 of $10 7/8 and the option exercise price of $6.50
per share.
(2) Calculated as the difference between the fair market value of the Common
Stock at December 31, 1998 of $10 7/8 and the option exercise price of $5.76
per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From October 1996 through June 1998, Marvin M. Reiss, a director of the
Company since October 1998, together with his wife, has invested in the Company
from time to time by purchasing Common Stock and by participating in certain of
the Company's convertible promissory note offerings. During the two-year period
ended December 31, 1998, Mr. Reiss invested a total of $350,000. For his various
investments, he received 10% convertible notes and warrants to purchase an
aggregate of 23,589 shares of the Company's Common Stock. The warrants are
exercisable at exercise prices ranging from $4.88 to $7.67.
Mr. Reiss is the Chairman of the Board, Chief Executive Officer and a
principal shareholder of The Rebot Corporation, a record company that produces,
manufactures and distributes recorded music under various labels, including
Arabesque Recordings. In October 1998, the Company signed a sponsorship
agreement with Arabesque Recordings under the terms of which Arabesque became
the first sponsor of the Music Channel on the Company's Web site and, as such,
currently receives the premiere advertising position on the opening Web page of
the Music Channel. The Company also delivers Arabesque audio commercials in
connection with downloaded or streamed audio-based music content, for which
Arabesque receives a royalty. The Company cannot determine at this time the
financial value of this adverting relationship either to Arabesque or the
Company.
From time to time during 1998 and 1999, the Company has retained engineering
consultants from the firm, TDP, Inc., a personnel placement and consulting firm
located in San Jose, California. Muninderpal Rehki, a member of the Company's
Board of Directors, is a director and the majority owner of TDP. The arrangement
with TDP requires the Company to pay TDP a fee for the use of each consultant,
and TDP, in turn, is responsible for payment of salary and benefits to the
consultants hired out to the Company. During 1998, the Company paid TDP a total
of $204,331 for the services of eight consultants. No consultants were retained
under this arrangement with TDP in 1997.
14
<PAGE>
In February 1999, the Company loaned to Mr. Rehki a total of $107,250. The
note bears interest at 10% per annum and is due in full, if not paid sooner, on
February 23, 2000. Mr. Rehki's note is subordinate to all present and future
borrowings of the Company.
The Company has adopted a policy with respect to related-party transactions.
Pursuant to that policy, any transactions with officers, directors or affiliates
of the Company are approved or ratified by a majority of independent, outside
members of the Board of Directors who do not have an interest in the
transactions. In addition, these transactions must be on terms no less favorable
to the Company than those that can be obtained from unaffiliated third parties.
At all times, the Company expects to maintain at least two independent directors
on its Board.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors
[LOGO]
CORPORATE SECRETARY
September 27, 1999
15
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AUDIOHIGHWAY.COM
1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned Shareholder of audiohighway.com, a California corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated September 27, 1999, and Annual
Report to Shareholders for the year ended December 31, 1998, and hereby appoints
Nathan M. Schulhof and Grant Jasmin, and each of them, proxies and
attorneys-in-fact with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Shareholders of the Company to be held on October 21, 1999 at 10:00 a.m.,
California Time, at the Doubletree Hotel, 2050 Gateway Place, San Jose,
California, and at any adjournment or adjournments thereof, and to vote all
shares of Common Stock to which the undersigned would be entitled, if then and
there personally present, on the matter set forth below:
1. ELECTION OF DIRECTORS FOR all nominees listed WITHHOLD authority
below(EXCEPT AS MARKED TO THE to vote for all
CONTRARY BELOW) / / nominees listed
below / /
(INSTRUCTION: TO WITHHOLD THE AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE BOX NEXT TO THE NOMINEE'S NAME BELOW.)
Name of Nominee:
<TABLE>
<S> <C> <C> <C> <C>
Lee M. Gammill / / Grant Jasmin / / Robert S. Leff
Muninderpal Rehki / / Marvin M. Reiss / / Nathan M. Schulhof
<CAPTION>
Lee M. Gammill / /
<S> <C>
Muninderpal Rehki / /
</TABLE>
2. PROPOSAL TO AMEND THE 1996 STOCK OPTION PLAN TO INCREASE THE SIZE OF THE
PLAN FROM APPROXIMATELY 360,000 TO 1,800,000 OPTIONS
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO AMEND THE 1996 STOCK OPTION PLAN TO PROVIDE FOR AUTOMATIC GRANTS
OF OPTIONS TO NON-EMPLOYEE DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION OF GRANT THORNTON LLP AS INDEPENDENT
AUDITORS FOR THE YEAR ENDED DECEMBER 31, 1999
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournment(s) thereof.
Any one of such attorneys-in-fact or substitutes as shall be present and shall
act at said meeting or any adjournment(s) thereof shall have and may exercise
all powers of said attorneys-in-fact hereunder.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN
SPECIFIED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSALS 2, 3
AND 4, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS
TO COME BEFORE THE ANNUAL MEETING.
Dated: ________________________, 1999
_____________________________________
Signature
_____________________________________
Signature
(This proxy should be marked, dated,
signed by the stockholder(s) exactly
as his name appears hereon and
returned promptly in the enclosed
envelope. Executors, administrators,
guardians, officers of corporations
and others signing in a fiduciary
capacity should state their full
titles as such. If shares are held by
joint tenants or as community
property, both should sign.)
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO MARK,
SIGN, DATE
AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
