<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
800 TRAVEL SYSTEMS, 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 No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
800 TRAVEL SYSTEMS, INC.
4802 Gunn Highway
Tampa, Florida 33624
Dear Stockholder: June 5, 2000
You are cordially invited to attend the Annual Meeting (the "Meeting")
of stockholders of 800 Travel Systems, Inc. (the "Company"). The Meeting will be
held July 10, 2000 at 9:00 a.m., Eastern Standard Time, at the Hyatt Regency
Westshore, located at 6200 Courtney Campbell Causeway, Tampa, Florida 33607.
The Notice of the Meeting and the Proxy Statement on the following
pages cover the formal business of the Meeting, which includes the election of
Directors, a proposal to approve the Company's 2000 Stock Incentive Plan and a
proposal to ratify the appointment of the Company's independent certified public
accountants. We will report on the progress of the Company and comment on
matters of current interest.
It is important that your shares be represented at the Meeting. We ask
that you promptly sign, date and return the enclosed proxy card in the envelope
provided, even if you plan to attend the Meeting. Returning your proxy card will
not prevent you from voting in person at the Meeting if you are present and
choose to do so.
If your shares are held in street name by a brokerage firm, your broker
will supply you with a proxy to be returned to the brokerage firm. It is
important that you return the form to the brokerage firm as quickly as possible
so that the brokerage firm may vote your shares. You may not vote your shares in
person at the Meeting unless you obtain a power of attorney or legal proxy from
your broker authorizing you to vote the shares, and you present this power of
attorney or proxy at the Meeting.
Your Board of Directors and management look forward to greeting you
personally at the Meeting.
Cordially,
/s/ Mark D. Mastrini
----------------------------
Mark D. Mastrini
Chief Executive Officer
and Chief Operating Officer
<PAGE> 3
800 TRAVEL SYSTEMS, INC.
4802 Gunn Highway
Tampa, Florida 33624
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MONDAY, JULY 10, 2000
Notice is hereby given that the Annual Meeting of stockholders of 800
Travel Systems, Inc. (the "Company"), a Delaware corporation, will be held at
the Hyatt Regency Westshore, located at 6200 Courtney Campbell Causeway, Tampa,
Florida 33607, on Monday, July 10, 2000, at 9:00 a.m., Eastern Standard Time
(the "Meeting") for the following purposes:
1. To re-elect two Directors to serve until the Annual Meeting in
2003, until their successors are elected and qualified or
until their earlier resignation, removal from office or death;
2. To approve the Company's 2000 Stock Incentive Plan to
authorize the issuance of 500,000 shares of Common Stock
covered by the plan;
3. To ratify the appointment of Grant Thornton LLP as the
Company's independent auditors for fiscal year 2000; and
4. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete description of the matters to be acted upon at the
Meeting. The 1999 Annual Report of the Company is also enclosed. Stockholders of
record at the close of business on Wednesday, May 24, 2000 are entitled to
receive notice of and to vote at the Meeting and any adjournment thereof.
All stockholders are cordially invited to attend the Meeting. Whether
or not you expect to attend, please sign and return the enclosed Proxy promptly
in the envelope provided to assure the presence of a quorum. You may revoke your
Proxy and vote in person at the Meeting, if you desire. If your shares are held
in street name by a brokerage firm, your broker will supply you with a proxy to
be returned to the brokerage firm. It is important that you return the form to
the brokerage firm as quickly as possible so that the brokerage firm may vote
your shares. You may not vote your shares in person at the Meeting unless you
obtain a power of attorney or legal proxy from your broker authorizing you to
vote the shares, and you present this power of attorney or proxy at the Meeting.
Please note that attendance at the Meeting will be limited to
stockholders of the Company as of the record date (or their duly authorized
representatives). If your shares are held by a bank or broker, please bring to
the Meeting your bank or brokerage statement evidencing your beneficial
ownership of the Company stock.
By order of the Board of Directors
/s/ Robert B. Morgan
-----------------------------------
ROBERT B. MORGAN
Secretary
Tampa, Florida
June 5, 2000
<PAGE> 4
800 TRAVEL SYSTEMS, INC.
4802 Gunn Highway
Tampa, Florida 33624
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of 800 Travel Systems, Inc. (the "Company")
to be voted at the Annual Meeting of Stockholders (the "Meeting") to be held on
Monday, July 10, 2000, at 9:00 a.m., Eastern Standard Time at the Hyatt Regency
Westshore in Tampa, Florida.
The Board of Directors has fixed the close of business on May 24, 2000
as the record date for the determination of stockholders entitled to receive
notice of, and to vote at, the Meeting. A stockholder giving a proxy has the
right to revoke it by giving written notice of such revocation to the Secretary
of the Company at any time before it is voted, by submitting to the Company a
duly executed, later dated proxy or by voting the shares subject to such proxy
by written ballot at the Meeting. The presence at the Meeting of a stockholder
who has given a proxy does not revoke such proxy unless such stockholder files
the aforementioned notice of revocation or votes by written ballot.
This Proxy Statement and the enclosed form of proxy are first being
mailed to stockholders on or about June 5, 2000. All shares represented by valid
proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the proxy. Each stockholder will be
entitled to one vote for each share of Common Stock registered in his or her
name on the books of the Company as of the close of business on May 24, 2000, on
all matters that come before the Meeting. If a proxy is signed but no
specification is given, the share will be voted "FOR" Proposals 1, 2 and 3 (to
elect the Board's nominees to the Board of Directors, to approve the 2000 Stock
Incentive Plan and to ratify the appointment of Independent Auditors for 2000).
The cost of soliciting proxies will be borne by the Company. The
solicitation of proxies may be made by mail, telephone, facsimile or telegraph
or in person by directors, officers and regular employees of the Company,
without additional compensation for such services. Arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries to forward
proxy soliciting material to the beneficial owners of stock held of record by
such persons, and the Company will reimburse them for reasonable out of pocket
expenses incurred by them in so doing.
1
<PAGE> 5
PROPOSAL ONE
RE-ELECTION OF DIRECTORS
There are currently six seats on the Board of Directors of the Company,
with no vacancies. The Board is divided into three classes of Directors: Class
I, Class II and Class III Directors. At the Company's annual meeting in 1999,
Class I Directors were elected to hold office until the Meeting, Class II
Directors were elected to hold office until the Company's annual meeting in
2001, and Class III Directors were elected to hold office until the Company's
annual meeting in 2002. After completion of the initial terms, all Directors
elected or re-elected as Class I, Class II or Class III Directors will serve
staggered three-year terms. Class I Directors will be re-elected at the Meeting
to hold office until the Company's annual meeting in 2003. Directors hold their
positions until the annual meeting of stockholders in the year in which their
term expires and until their respective successors are elected and qualified or
until their earlier resignation, removal from office or death. The term of
office of L. Douglas Bailey and Peter M. Sontag, the Company's Class I
Directors, will expire at the Meeting. The Board of Directors recommends that L.
Douglas Bailey and Peter M. Sontag be re-elected at the Meeting to hold office
as Class I Directors until their successors shall be duly elected and qualified
or until their earlier resignation, removal from office or death.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
RE-ELECTION OF L. DOUGLAS BAILEY AND PETER M. SONTAG AS DIRECTORS TO SERVE THE
TERMS DESCRIBED ABOVE. For further information on Messrs. Bailey and Sontag see
"Management Directors and Executive Officers" and "Security Ownership of
Management and Others." Stockholders may vote for Messrs. Bailey and Sontag and
the affirmative vote of holders of a majority of the shares represented, in
person or by proxy, and entitled to vote at the Meeting is required to re-elect
Messrs. Bailey and Sontag. Abstentions and broker non-votes will be counted
toward the number of shares represented at the Meeting. Stockholders may not
vote cumulatively in the election of Directors. In the event Messrs. Bailey and
Sontag should be unable to serve, which is not anticipated, the Board of
Directors will vote for such other person or persons for the office of Director
as the Board of Directors may recommend.
2
<PAGE> 6
MANAGEMENT - DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth (i) the names and ages of the Directors
and executive officers of the Company and the positions they hold with the
Company and (ii) the names and ages of the nominees for Director listed herein.
Executive officers shall serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Mark D. Mastrini...............................36 Chief Executive Officer, Chief Operating Officer and Director
Peter M. Sontag................................57 President and Director (3)
Robert B. Morgan...............................35 Chief Financial Officer, Secretary and Treasurer
Michael A. Gaggi...............................38 Vice President-Business Development and Director
George A. Warde................................78 Chairman of the Board (1)(2)
Carl A. Bellini................................66 Director (1)(2)
L. Douglas Bailey .............................58 Director (1)(2)(3)
Biagio Bellizzi................................60 Vice President-Marketing
Frank Zhao.....................................40 Vice President-Controller
Constance Norris...............................45 Executive Vice President-Operations
</TABLE>
- ------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Directors Currently Nominated for Re-Election.
INFORMATION REGARDING OUTSIDE DIRECTORS:
MR. GEORGE A. WARDE has served as a director of the Company since
October 1997, and as its Chairman since April 1998. Mr. Warde is currently a
general manager for Casino Express Airlines. Since 1992, he has served as a
consultant to various businesses including Oaklawn Partners Ltd. (a consulting
firm), Sener (a financial advisory firm in Madrid, Spain), Aircraft Braking
Systems, Inc. (a manufacturer of aircraft braking systems), Ayres Corp. (an
aircraft manufacturer), Airline Capital Holding Corp. (an investment holding
company that invests in airline projects), America Trans Africa Airlines (an
airline) and Rich Airways (an airline on whose board he is also serving as a
director). From October 1994 until January 1995, he served as temporary
president and chief executive officer of Private Jet Expeditions, an airline.
From August 1995 until February 1996, he served as president and chief executive
officer of Presidential Air, an airline.
MR. CARL A. BELLINI has served as a director of the Company since
November 1997. From 1992 until 1997, Mr. Bellini was executive vice president of
marketing and stores of Revco D.S., Inc., a drugstore chain which was sold to
the CVS chain in May 1997. From 1994 until 1997, Mr. Bellini was a director of
Revco and from 1993 until 1997 he was chief operating officer of Revco. Mr.
Bellini is also advisor to the boards of Manco, a privately owned adhesives and
tape company, a New York Stock Exchange listed manufacturer of security devices,
and Farmacia Ahumada, a Chilean drugstore chain, and a consultant to Ratcher
Press, a publisher of Chain Drug Review and Mass Marketing Review, which are
industry publications.
MR. L. DOUGLAS BAILEY has served as a director of the Company since
November 1997. In 1995, he founded Bailey & Associates, Inc., an international
retail consulting firm providing information and assistance to consumer goods
3
<PAGE> 7
companies and retail stores. In 1980, Mr. Bailey and his wife founded Regent
Properties, a company specializing in the development of commercial warehouse
and office space. Mr. Bailey currently is a property developer for Regent
Properties. From 1993 until 1995, Mr. Bailey was president of Home Shopping
Club, Inc., the flagship company of the Home Shopping Network. Mr. Bailey is on
the board of directors of Sel-Lab Marketing, a cosmetics firm. He also serves on
the boards of the Pinellas (Florida) Industrial Council and the Florida Lung
Association, and serves on the board of trustees or advisory boards of Ruth
Eckerd Hall (a performing arts center), The Goodwill Suncoast Foundation, Inc.
(a private foundation), the University of Florida Retail School, the University
of South Florida's Stavros Economic Center and Morton Plant Mease Hospital.
INFORMATION REGARDING INSIDE DIRECTORS AND EXECUTIVE OFFICERS:
MR. MARK D. MASTRINI has served as the Company's Chief Operating
Officer since January 1996 and Chief Executive Officer since April 1998. Mr.
Mastrini also served as the Company's President from January 1997 until November
1999. Prior to joining the Company, from October 1992 until October 1996, Mr.
Mastrini was the founder and owner of One on One Consulting, a consulting firm
in Pueblo, Colorado. From October 1993 until December 1996, he was the owner and
editor of Pueblo West Eagle Monthly Magazine.
MR. MICHAEL A. GAGGI has served as a director of the Company since its
incorporation as 800 Travel Systems, Inc. in November 1995, and was its Chairman
until April 1998. Mr. Gaggi is currently the Vice President of Business
Development of the Company. Since January 1998, Mr. Gaggi has been providing
services to privately and publicly-held companies through 8607 Colonial Group,
Inc., a financial consulting firm which he controls. Mr. Gaggi served as a
senior vice president at Joseph Stevens & Company, Inc., an investment banking
firm in New York City from 1994 until December 1997, when he resigned from such
position. Mr. Gaggi has been a principal director of Upscale Eyeglass Boutiques
Myoptics since 1990. Joseph Stevens & Company, Inc. is not affiliated with or
related to The Joseph Stevens Group, Inc., the travel agency acquired by the
Company in January 1998, its sole stockholder, The Joseph Stevens Group, LLC or
any of its equity members.
MR. PETER M. SONTAG has served as a director and the President of the
Company since November 1999. Prior to joining the Company, Mr. Sontag was
Chairman of the Board of Directors of Travel Industries, Inc. dba THOR, Inc.
from February 1997 until November 1999, a telecommunications, publishing and
travel services company specializing in supplying marketing and e-commerce
services to the travel industry. THOR was sold in September 1999 to Trip.com, an
Internet travel business. Since February 1994, Mr. Sontag has served as a
director of World Airways, Inc., a publicly-held airline. Since June 1976 to the
present, Mr. Sontag has served as the President of FastLane Travel, Inc., an
incentive company that specializes in high-net worth individuals. From January
1995 until January 1997, Mr. Sontag provided strategic new business consultation
for Choice Hotel International, Inc., Ideon Corporation, the Deutscher
Reiseburoverband, The Franklin Mint, Creative Hotel Associates, Inc. and Crown
Marketing Group, Inc. For seven months of that time, Mr. Sontag also served as
the President of OAG Travel Services, one of the Reed Elsevier companies. Since
March 1995, Mr. Sontag has served as a director of IJB Insurance, Inc., an
insurance brokerage company. From December 1986 until January 1995, Mr. Sontag
was the Chairman and Chief Executive Officer of US Travel, Inc., a travel
management and distribution company.
4
<PAGE> 8
MR. ROBERT B. MORGAN has served as the Company's Chief Financial
Officer, Secretary and Treasurer since September 1999 and has been employed by
the Company since July 1999. Prior to joining the Company, Mr. Morgan served for
ten years as the Vice President and Chief Financial and Information Officer for
Ace Auto Parts Co., Inc., a publicly held distributor of automotive parts and
accessories. Mr. Morgan is a certified public accountant.
INFORMATION REGARDING CERTAIN SIGNIFICANT EMPLOYEES:
MR. BIAGIO BELLIZZI has served as the Company's Vice
President-Marketing since its incorporation as 800 Travel Systems, Inc. in
November 1995. From June 1995 through November 1995, Mr. Bellizzi was employed
by 1-800 Low-Air Fare, Inc., the Company's predecessor, as Vice
President-Operations. From 1991 through June 1995, Mr. Bellizzi was employed by
Thomas Cook Travel, Inc. as Director-Leisure Marketing from 1993 until 1995 and
as Director-Retail Offices from 1991 to 1993. Mr. Bellizzi has over 30 years
experience in the travel industry.
MR. FRANK ZHAO was appointed Vice President-Controller of the Company
in October 1997. Prior to joining the Company, Mr. Zhao was a senior accountant
from January 1996 until September 1997 at Toho Shipping (USA), a shipping
company. From 1993 until 1995, Mr. Zhao was an associate auditor at Coopers and
Lybrand in Washington, D.C. Mr. Zhao is a certified public accountant.
MS. CONSTANCE NORRIS has served as the Company's Executive Vice
President-Operations since April 1998 and has been employed by the Company since
February 1996. From April 1995 through November 1995, Ms. Norris was employed by
the Company's predecessor, 1-800-Low-Air-Fare, Inc., as a Supervisor of
Reservations and Training. Ms. Norris was the founder and President of Universal
Star Tour and Travel, Inc. in Orlando, Florida from 1993 until 1995.
BOARD OF DIRECTORS
During 1999, the Board of Directors took various actions by unanimous
written consent and held one Board Meeting. The entire Board of Directors
functions as a Nominating Committee for recommending to stockholders candidates
for positions on the Board of Directors and the Board will consider written
recommendations from stockholders for nominations to the Board of Directors in
accordance with the procedures set forth in the By-Laws of the Company.
AUDIT COMMITTEE
The Audit Committee, consisting of Messrs. Warde, Bellini and Bailey,
is authorized to recommend to the Board independent certified public accounting
firms for selection as auditors of the Company, make recommendations to the
Board on auditing matters, examine and make recommendations to the Board
concerning the scope of audits, and review and approve the terms of transactions
between the Company and related party entities. The Audit Committee met
separately once during 1999. The Company retained Grant Thornton LLP to conduct
the audit for the year ended December 31, 1999.
COMPENSATION COMMITTEE
The Compensation Committee, consisting of Messrs. Warde, Bellini and
Bailey, is authorized to exercise all of the powers of the Board of Directors
with respect to matters pertaining to compensation and benefits, including, but
not limited to, salary matters, incentive/bonus plans, stock option plans,
5
<PAGE> 9
investment programs and insurance plans, and the Compensation Committee is
authorized to exercise all of the powers of the Board in matters pertaining to
employee promotions and the designation and/or revision of employee positions
and job titles. The Compensation Committee met separately once during 1999.
See "Certain Transactions" for additional information on certain members of
management.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and stockholders of more than 10% of the Company's
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock and any other
equity securities of the Company. To the Company's knowledge, based solely upon
a review of forms, reports and certificates furnished to the Company by such
persons, all such reports were filed on a timely basis during 1999.
6
<PAGE> 10
VOTING SECURITIES AND PRINCIPAL SECURITY HOLDERS
As of April 21, 2000, the Company had outstanding and entitled to vote
7,616,296 shares of Common Stock, par value $.01 per share ("Common Stock"), and
3,319,800 non-voting Redeemable Common Stock Purchase Warrants ("Warrants").
The holders of Common Stock are entitled to vote as a single class and
to one vote per share, exercisable in person or by proxy, at all meetings of
stockholders. Holders of Warrants will not be entitled to vote at the Meeting.
The presence in person or by proxy of a majority of the issued and outstanding
shares of stock of the Company entitled to vote will constitute a quorum for
purposes of conducting business at the Meeting. Directors will be elected by a
plurality vote. The approval of the 2000 Stock Incentive Plan and the
ratification of auditors will require the affirmative vote of a majority of the
votes cast with respect to such proposals. For purposes of determining the votes
cast with respect to any matter presented for consideration at the Meeting, only
those votes cast "for" or "against" are included. Abstentions and broker
non-votes are counted only for the purpose of determining whether a quorum is
present. Abstentions and broker non-votes will not be included in vote totals
and will not affect the outcome of the vote.
To the knowledge of the Company, the following table sets forth, as of
April 21, 2000, information as to the beneficial ownership of the Company's
Common Stock by (i) each person known to the Company as having beneficial
ownership of more than 5% of the Company's Common Stock, (ii) each person
serving the Company as a Director on such date and each nominee for Director,
(iii) each person serving the Company as an executive officer on such date who
qualifies as a "named executive officer" as defined in Item 402(a)(2) of
Regulation S-B under the Securities Exchange Act of 1934, and (iv) all of the
Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF SHARES OF COMMON STOCK
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) OUTSTANDING(2)
- ------------------- -------------------------- -----------------------
<S> <C> <C> <C>
SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS:
Michael A. Gaggi(3)........................................... 575,404 7.5%
Mark D. Mastrini(4)........................................... 487,500 6.1%
Peter M. Sontag(5)............................................ 100,000 1.3%
George A. Warde(6)............................................ 85,000 1.1%
Carl A. Bellini(7)............................................ 100,000 1.3%
L. Douglas Bailey(7).......................................... 100,000 1.3%
Robert B. Morgan(8)........................................... 20,000 *
Officers and Directors as a Group (7 persons)(9).............. 1,467,904 17.5%
</TABLE>
- ----------------
* Less than one percent.
(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is 4802 Gunn Highway, Suite 140, Tampa, Florida 33624.
(2) Unless otherwise noted, each person has voting and investment power, with
respect to all such shares. Based on 7,616,296 shares of Common Stock
outstanding. Pursuant to the rules of the Securities and Exchange
Commission, certain shares of Common Stock which a person has the right to
acquire within 60 days of the date hereof pursuant to the exercise of stock
options are deemed to be outstanding for the purpose of computing the
percentage ownership of such person but are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
(3) Does not include 2,500 shares owned beneficially by Rose Gaggi, Mr. Gaggi's
mother, as to which shares Mr. Gaggi disclaims beneficial ownership.
Includes 20,335 shares issuable upon exercise of options which are
7
<PAGE> 11
currently exercisable at $1.00 per share and 12,500 shares issuable upon
exercise of options which are exercisable in May 2000 at $5.50 per share.
(4) Includes 350,000 shares issuable upon exercise of options which are
currently exercisable at $5.00 per share and 7,500 shares issuable upon
exercise of options which are exercisable in May 2000 at $5.50 per share.
(5) Includes 50,000 shares issuable upon exercise of options which are
currently exercisable at $3.00 per share, 25,000 shares issuable upon
exercise of options which are currently exercisable at $5.00 per share, and
25,000 shares issuable upon exercise of options which are currently
exercisable at $7.00 per share.
(6) Includes 50,000 shares issuable upon exercise of options which are
currently exercisable at $3.00 per share and 35,000 shares issuable upon
exercise of options which are currently exercisable at $3.10 per share.
(7) Includes 50,000 shares issuable upon exercise of options which are
currently exercisable at $3.00 per share and 50,000 shares issuable upon
exercise of options which are currently exercisable at $3.10 per share.
(8) Includes 20,000 shares issuable upon exercise of options which are
currently exercisable at $5.00 per share.
(9) Includes 795,335 shares issuable pursuant to the options referred to in
footnotes 3, 4, 5, 6, 7 and 8.
EXECUTIVE COMPENSATION
COMPENSATION TO OUTSIDE DIRECTORS
The Company pays each Director who is not an employee of the Company
$2,000 for each Board of Directors meeting attended, plus reimbursement for all
expenses incurred by such Director in connection with such attendance at any
meeting of the Board of Directors. Directors are also eligible to participate in
each of the Company's current stock incentive plans and the Company anticipates
that they will continue to be eligible to participate any of such plans in the
future.
SUMMARY COMPENSATION TABLE
EXECUTIVE COMPENSATION TABLES
The following table sets forth the annual and long-term compensation
for services to the Company for the years ended December 31, 1999, 1998 and
1997, provided to Mr. Mastrini, the Chief Executive Officer and Chief Operating
Officer of the Company and the only employee of the Company whose compensation
exceeded $100,000 during such years.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation ------------
----------------------------------------------------------------- Securities
Name and Other Annual Underlying
Principal Position Year Salary Bonus Compensation Options
------------------ ---- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Mark D. Mastrini 1997 $125,205 $0 $8,333 0
Chief Executive 1998 $176,357 $0 $8,333 430,000(2)
Officer and Chief 1999 $220,140 $40,000(1) $8,312 0
Operating Officer
Operating Officer
</TABLE>
- -------------------
(1) Represents a bonus earned by Mr. Mastrini in 1998, but which was paid to
him by the Company in 1999.
(2) Includes 25,000 warrants identical to the Warrants sold to the public in
the IPO, all of which warrants Mr. Mastrini disposed of in April 1998.
8
<PAGE> 12
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No option grants were made by the Company in fiscal year 1999 to named
executive officers of the Company other than certain option grants made by the
Company in fiscal year 1999 to certain executive officers in connection with
their initial employment with the Company pursuant to their employment
agreements. See "Employment Agreements." No grants of stock appreciation rights
(SARS) were made by the Company in fiscal year 1999.
AGGREGATED OPTIONS/SAR EXERCISES DURING YEAR ENDED DECEMBER 31, 1999
AND VALUE OF OPTIONS/SAR AT DECEMBER 31, 1999
The following table summarizes option exercises during the year ended
December 31, 1999 by the executive officers named in the Summary Compensation
Table above, and the values of the options held by such persons at December 31,
1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT DECEMBER 31, OPTIONS AT DECEMBER 31,
SHARES ACQUIRED VALUE 1999 EXERCISABLE/ 1999 EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ----- ---------------------- -------------- ----------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
Mark D. Mastrini 0 0 350,000/55,000 $0/$0
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Mark Mastrini entered into an employment agreement with the
Company, pursuant to which he agreed to serve as the Company's Chief Executive
Officer and President until May 31, 2001. On November 23, 1999, Mr. Mastrini
entered into an amendment to such employment agreement (hereinafter referred to
together with the initial employment agreement as the "Mastrini Employment
Agreement"), pursuant to which the term of employment for Mr. Mastrini was
extended to December 31, 2003, and whereby the Mastrini Employment Agreement
reflected that Mr. Mastrini was no longer required to serve as the President of
the Company. The Mastrini Employment Agreement is renewable for subsequent one
year terms subject to the terms of the Mastrini Employment Agreement. Mr.
Mastrini agreed to devote his entire working time and attention to the business
of the Company. In addition, Mr. Mastrini has agreed not to compete with the
business of the Company for a period of ninety days following the termination of
his employment with the Company and has agreed not to solicit or accept business
from any customer of the Company or solicit any employee of the Company to
terminate his or her relationship with the Company for a period of 12 months
following the termination of his employment with the Company. As of April 21,
2000, Mr. Mastrini is entitled to a base annual salary of $214,200, which salary
may be adjusted on June 1, 2000 to reflect the increase in the consumer price
index in the previous year and to provide for a five percent raise. As
additional compensation pursuant to the Employment Agreement, the Company issued
100,000 shares of Common Stock to Mr. Mastrini, which shares became fully vested
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as of January 1999, and the Company granted options to purchase 50,000 shares of
Common Stock, which vested as follows: 25,000 on January 21, 1998, and 25,000 on
January 21, 1999. The Company also agreed to issue Mr. Mastrini 50,000 shares of
its Common Stock upon the second anniversary of the Mastrini Employment
Agreement if Mr. Mastrini was still employed by the Company. Such shares vested
in January 2000. The Mastrini Employment Agreement provides that in the event
that employment is terminated by the Company other than for cause, Mr. Mastrini
will be entitled to receive from the Company the balance of any base salary
which would have been paid to Mr. Mastrini over the term of the Mastrini
Employment Agreement.
Mr. Peter Sontag has entered into an employment agreement with the
Company as of November 23, 1999 (the "Sontag Employment Agreement"), pursuant to
which he has agreed to serve as the Company's President. The Sontag Employment
Agreement terminates on November 30, 2003 and is renewable for subsequent one
year terms subject to the terms of the Sontag Employment Agreement. Mr. Sontag
agreed to devote his primary and substantial working time and attention to the
business of the Company. In addition, Mr. Sontag has agreed not to solicit or
accept business from any customer of the Company or solicit any employee of the
Company to terminate his or her relationship with the Company for a period of 12
months following the termination of his employment with the Company with cause,
upon his disability or upon his resignation without good reason. Mr. Sontag is
entitled initially to a base annual salary of $174,000, which salary may be
adjusted in each subsequent year of the Sontag Employment Agreement to reflect
the increase in the consumer price index in the previous year. Mr. Sontag shall
also be eligible to receive an annual bonus from the Company, with the actual
amount of such bonus, if any, to be determined by the Company's Board upon the
recommendation of the Compensation Committee. As additional compensation
pursuant to the Sontag Employment Agreement, the Company granted Mr. Sontag an
option to purchase 700,000 shares of the Company's Common Stock, in four
separate groups consisting of 100,000 Group A shares and 200,000 shares each of
Group B, C and D shares which vest upon the earlier of the fourth anniversary of
the Sontag Employment Agreement or the following applicable exercise dates: (1)
As of February 23, 2000, Mr. Sontag's option may be exercised as to a maximum of
50,000 Group A shares at an exercise price of $3.00 per share, 25,000 Group B
shares at an exercise price of $5.00 per share, and 25,000 Group B shares at an
exercise price of $7.00 per share; (2) Following the later of the (i) sixth
monthly anniversary of the Sontag Employment Agreement, or (ii) attainment by
the Common Stock of a closing price of $4.00, Mr. Sontag's option may be
exercised as to a maximum of 50,000 Group A shares at an exercise price of $3.00
per share; (3) Following the later of the (i) sixth monthly anniversary of the
Sontag Employment Agreement, or (ii) attainment by the Common Stock of a closing
price of $6.00, Mr. Sontag's option may be exercised as to a maximum of 75,000
Group B shares at an exercise price of $5.00 per share; (4) Following the later
of the (i) sixth monthly anniversary of the Sontag Employment Agreement, or (ii)
attainment by the Common Stock of a closing price of $8.00, Mr. Sontag's option
may be exercised as to a maximum of 75,000 Group B shares at an exercise price
of $7.00 per share; (5) Following attainment by the Common Stock of a closing
price of $10.00, Mr. Sontag's option may be exercised as to all Group C shares
at an exercise price of $3.00 per share; and (6) Following attainment by the
Common Stock of a closing price of $25.00, Mr. Sontag's option may be exercised
as to all Group D shares at an exercise price of $3.00 per share. In the event
of a good reason termination by Mr. Sontag, which includes a change in control
(as defined in the Sontag Employment Agreement), the Sontag Employment Agreement
provides that the Company shall pay Mr. Sontag one-twelfth of Mr. Sontag's
annual base salary for the greater of twelve months or the remainder of the term
of the Sontag Employment Agreement, or at Mr. Sontag's option, he may elect to
receive all sums due to him in a single lump sum payment discounted to present
value at an annual discount rate of eight percent.
Mr. Michael A. Gaggi has entered into an employment agreement on
November 5, 1999 with the Company (the "Gaggi Employment Agreement"), pursuant
to which he agreed to serve as the Company's Vice President of Business
Development. The Gaggi Employment Agreement terminates on December 31, 2003, and
is renewable for subsequent one year terms subject to the terms of the Gaggi
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<PAGE> 14
Employment Agreement. Mr. Gaggi agreed to devote his primary and substantial
time and attention to the business of the Company. In addition, Mr. Gaggi has
agreed not to solicit or accept business from any customer of the Company or
solicit any employee of the Company to terminate his or her relationship with
the Company for a period of 12 months following the termination of his
employment with the Company with cause, upon his disability or upon his
resignation without good reason. As of November 5, 1999, Mr. Gaggi is entitled
initially to a base annual salary of $162,500, which salary may be adjusted in
each subsequent year of the Gaggi Employment Agreement to reflect the increase
in the consumer price index in the previous year and to provide for a five
percent raise. In the event of a good reason termination by Mr. Gaggi, which
includes a change in control (as defined in the Gaggi Employment Agreement) and
the termination of Mark Mastrini's employment by the Company, the Gaggi
Employment Agreement provides that the Company shall pay Mr. Gaggi one-twelfth
of Mr. Gaggi's annual base salary for the greater of twelve months or the
remainder of the term of the Gaggi Employment Agreement, or at Mr. Gaggi's
option, he may elect to receive all sums due to him in a single lump sum payment
discounted to present value at an annual discount rate of eight percent.
Mr. Robert Morgan has entered into an employment agreement with the
Company as of September 8, 1999 (the "Morgan Employment Agreement"), pursuant to
which he agreed to serve as the Company's Chief Financial Officer. The Morgan
Employment Agreement terminates on September 8, 2001, and is renewable for
subsequent one year terms subject to the terms of the Morgan Employment
Agreement. Mr. Morgan agreed to devote his entire working time and attention to
the business of the Company. In addition, Mr. Morgan has agreed not to compete
with the business of the Company for a period of 12 months following the
termination of his employment with the Company. As of September 8, 1999, Mr.
Morgan is entitled initially to a base annual salary of $86,000, which salary
may be adjusted in each subsequent year of the Morgan Employment Agreement to
reflect the increase in the consumer price index in the previous year and to
provide for a five percent raise. Mr. Morgan shall also be eligible to receive
an annual incentive bonus from the Company in an amount up to twenty percent of
his annual base salary in effect on the last day of the year, with the actual
amount of such bonus to be determined by the Compensation Committee of the
Company's Board. Mr. Morgan shall also be eligible to receive performance
bonuses at the discretion of the Compensation Committee in the form of grants of
Common Stock. As additional compensation pursuant to the Morgan Employment
Agreement, the Company granted Mr. Morgan options to purchase 10,000 shares of
Common Stock, which vest as follows: 5,000 on March 8, 2000, and 5,000 on
December 8, 2000. The Morgan Employment Agreement provides that in the event
that employment is terminated by the Company other than (1) for cause, (2) upon
death or disability, or (3) upon voluntary termination by Mr. Morgan, or in the
event that Mr. Mastrini ceases to be employed by the Company as its Chief
Executive Officer and Mr. Morgan provides notice to the Company within ninety
days thereof of the termination of the Morgan Employment Agreement, Mr. Morgan
will be entitled to receive from the Company monthly payments equal to
one-twelfth of Mr. Morgan's annual base salary for twelve months. In the event
of a change in control (as defined in the Morgan Employment Agreement), the
Morgan Employment Agreement provides that if Mr. Morgan is terminated other than
for cause within twelve months following a change of control of the Company, the
Company shall pay Mr. Morgan one-twelfth of Mr. Morgan's annual base salary for
twelve months plus his previous year's bonus, if any.
CERTAIN TRANSACTIONS
In April 1999, the Company entered into a $60,000 loan agreement and a
$100,000 deferred compensation agreement with Mr. Mastrini. The loan amount
will be forgiven in two $30,000 installments if Mr. Mastrini is employed by the
Company as of January 1, 2000 and 2001. The total deferred compensation will be
paid if Mr. Mastrini is employed by the Company as of April 1, 2009.
In February 1998, the Company and Mr. Gaggi entered into a Consulting
Agreement. Under the terms of the Consulting Agreement, Mr. Gaggi was entitled
to $5,000 per month in return for providing consulting services to the Company.
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<PAGE> 15
In May 1999, the Company increased the monthly payments paid to Mr. Gaggi in
return for such consulting services to $10,500 per month. The Consulting
Agreement was terminated on November 5, 1999, when Mr. Gaggi became an employee
of the Company and entered into the Gaggi Employment Agreement.
Mr. Vito Balsamo, a former director of the Company, may be considered a
promoter of the Company. During 1996 and 1997, the Company paid personal
expenses of Mr. Balsamo of $146,614.72. In May 1998, Mr. Balsamo tendered 24,766
shares of Common Stock to the Company in satisfaction of his outstanding
obligation to the Company of $146,614.72. Since December 1997, Mr. Balsamo has
been Vice President of Investments at Lexington Capital Partners and Company
Ltd.
PROPOSAL TWO
APPROVAL OF THE 2000 STOCK INCENTIVE PLAN
The Board of Directors adopted the 800 Travel Systems, Inc. 2000 Stock
Incentive Plan (the "Stock Incentive Plan") on March 27, 2000, subject to
approval by the stockholders of the Company at the Annual Meeting of
Stockholders.
The Stock Incentive Plan authorizes the Compensation Committee to grant
options to purchase shares of the Company's Common Stock ("Options"), stock
appreciation rights ("SARS") and/or awards of restricted stock ("Restricted
Stock") to officers, key employees and directors of the Company. The purposes of
the Stock Incentive Plan are to enable the Company to attract and retain
officers and key employees and to align the interests of such persons and
members of the Board of Directors with the interests of stockholders by giving
them a personal interest in the value of the Company's Common Stock.
SUMMARY OF THE STOCK INCENTIVE PLAN
THE FOLLOWING GENERAL DESCRIPTION OF CERTAIN FEATURES OF THE STOCK
INCENTIVE PLAN IS QUALIFIED IN ITS ENTIRETY TO REFERENCE TO THE STOCK INCENTIVE
PLAN, WHICH IS ATTACHED AS APPENDIX A TO THIS PROXY.
SHARES AVAILABLE UNDER THE STOCK INCENTIVE PLAN. Subject to adjustment
as provided in the Stock Incentive Plan, the number of shares of Common Stock
that may be issued or transferred and covered by outstanding awards granted
under the Stock Incentive Plan will not in the aggregate exceed 500,000, which
may be original issue shares, treasury shares, or a combination thereof. As of
April 21, 2000, the Company has issued options to purchase 50,000 shares of
Common Stock under the Stock Incentive Plan.
ELIGIBILITY. Officers, other key salaried employees of the Company,
consultants of the Company and members of the Board of Directors may be selected
by the Compensation Committee to receive benefits under the Stock Incentive
Plan. It is estimated that approximately 25 individuals currently are eligible
to participate in the Plan.
OPTIONS. Options granted to eligible employees under the Stock
Incentive Plan may be Options that are intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Code or Options that are not
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<PAGE> 16
intended to so qualify ("Nonstatutory Options"). Options granted to members of
the Board of Directors will be Nonstatutory Options.
If the Option is designated as an Incentive Stock Option, the purchase
price of the Common Stock that is the subject of such Option may be not less
than the fair market value of the Common Stock on the date the Option is
granted. If the Option is a Nonstatutory Option, the purchase price may be equal
to or less than the fair market value of the Common Stock on the date the Option
is granted, as the Committee shall determine. Incentive Stock Options granted to
an individual who owns (or is deemed to own) at least 10% of the total combined
voting power of all classes of stock of the Company must have an exercise price
of at least 110% of the fair market value of the Common Stock on the date of
grant and a term of no more than five years. The option price is payable at the
time of exercise in cash. The Stock Incentive Plan also authorizes a participant
to exercise an Option by delivery of a signed, irrevocable notice of exercise,
accompanied by payment in full of the option price by the participant's
stockbroker and an irrevocable instruction to the Company to deliver the shares
of Common Stock issuable upon exercise of the Option promptly to the
participant's stockbroker for the participant's account, provided that at the
time of such exercise, such exercise would not be illegal under the federal
securities laws, including laws governing margin loans.
No Options may be exercised more than 10 years from the date of grant.
Each employee's or director's stock option agreement may specify the period of
continuous service with the Company that is necessary before the Option will
become exercisable. If the Option is intended to be an Incentive Stock Option
and participant ends his or her employment or other relationship with the
Company for any reason other than retirement, disability or death, the Options
shall terminate immediately upon the date of termination, unless the
Compensation Committee decides in its sole discretion, to waive the termination
and amends the participant's option agreement to provide for an extended
exercise period, all as specified in the employee's or director's stock option
agreement. Any option agreement may, in the Compensation Committee's sole
discretion, allow for the participant, his or her personal representative or his
or her heirs, to exercise the Options after the termination of his or her
employment or other relationship with the Company for reason of the death or
disability of participant. Successive grants may be made to the same recipient
regardless of whether Options previously granted to him or her remain
unexercised.
TRANSFERABILITY. No Option may be transferred other than by will or the
laws of descent and distribution. Notwithstanding the foregoing, the
Compensation Committee may, in its discretion, permit a participant to transfer
all or a portion of his or her Options to members of his or her immediate
family, to trusts for the benefit of members of his or her immediate family, or
to family partnerships in which immediate family members are the only partners,
provided that the participant receive no consideration for such transfer and
that such Options shall be subject to termination as if the Options were in the
hands of the transferor.
ADJUSTMENTS. The maximum number of shares that may be issued or
transferred under the Stock Incentive Plan and the number of shares covered by
outstanding Options and the option prices per share applicable thereto are
subject to adjustment in the event of stock dividends, stock splits,
combinations, exchanges of shares, recapitalizations, mergers, consolidations,
liquidation of the Company, and similar transactions or events.
ADMINISTRATION AND AMENDMENTS. The Stock Incentive Plan will be
administered by the Board of Directors, or if the Board determines it is
desirable to delegate its authority to administer the Stock Incentive Plan, by a
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committee appointed by the Board, which may be the Compensation Committee. In
connection with its administration of the Stock Incentive Plan, the Board and
any committee are authorized to interpret the Stock Incentive Plan and related
agreements and other documents.
The Stock Incentive Plan may be amended from time to time by the Board
of Directors in such respects as it deems advisable. Further approval by the
stockholders of the Company will be required for any amendment that would (i)
increase the aggregate number of shares of Common Stock that may be issued under
the Stock Incentive Plan, (ii) materially change the classes of persons eligible
to participate in the Plan, or (iii) otherwise cause Rule 16b-3 under the
Exchange Act to cease to be applicable to the Stock Incentive Plan. No amendment
may change the Plan so as to cause any Option intended to be an Incentive Stock
Option to fail to meet the Internal Revenue Code requirements for an incentive
stock option. No amendment may change any rights an optionee may have under any
outstanding Option without the written consent of the Optionee. The Board may at
any time terminate or discontinue the Stock Incentive Plan. Unless terminated
sooner, the Stock Incentive Plan will continue in effect until all Options
granted thereunder have expired or been exercised, provided that no Options may
be granted after 10 years from the date the Board of Directors adopted the Stock
Incentive Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the Stock Incentive Plan based on
federal income tax laws in effect on April 21, 2000. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
NONSTATUTORY OPTIONS. In general, (i) an employee or director will not
recognize taxable income at the time he or she is granted Nonstatutory Options;
(ii) at the time of exercise of a Nonstatutory Option, ordinary income will be
recognized by the employee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares; and
(iii) at the time of sale of shares acquired pursuant to the exercise of a
Nonstatutory Option, any appreciation (or depreciation) in the value of the
shares after the date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.
INCENTIVE STOCK OPTIONS. No income generally will be recognized by an
employee upon either the grant or the exercise of an Incentive Stock Option. If
the shares of Common Stock issued to an employee pursuant to the exercise of an
Incentive Stock Option and the shares are not sold or otherwise transferred by
the employee within two years after the date of grant or within one year after
the transfer of the shares to the employee, then upon the sale of the shares any
amount realized in excess of the option price will be taxed to the employee as
long-term capital gain and any loss sustained will be a long-term capital loss.
Although an employee will not realize ordinary income upon the exercise of an
Incentive Stock Option, if the shares are sold or transferred after the
expiration of the one-year or two-year holding periods described above, the
excess of the fair market value of the Common Stock acquired at the time of
exercise over the option price may constitute an adjustment in computing
alternative minimum taxable income under Section 56 of the Code and, thus, may
result in the imposition of the "alternative minimum tax" pursuant to Section 55
of the Code on the employee.
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<PAGE> 18
If shares of Common Stock acquired upon the exercise of an Incentive
Stock Option are disposed of before the expiration of one-year or two-year
holding periods described above, including where the employee pays the option
price through a so-called cashless exercise, the employee generally will
recognize ordinary income in the year of disposition in an amount equal to any
excess of the fair market value of the shares at the time of exercise (or, if
less, the amount realized on the disposition of the shares in a sale or
exchange) over the option price paid for the shares. Any further gain (or loss)
realized by the employee generally will be taxed as short-term or long-term
capital gain (or loss) depending on the holding period.
TAX CONSEQUENCES TO THE COMPANY. To the extent that the recipient of an
Option recognizes ordinary income in the circumstances described above, the
Company generally will be entitled to a corresponding federal income tax
deduction, provided that, among other things, (i) the income meets the test of
reasonableness, and is an ordinary and necessary business expense; (ii) the
benefits do not constitute an "excess parachute payment" within the meaning of
Section 280G of the Code; and (iii) the deduction is not disallowed because the
compensation paid to the employee during the period exceeds the $1 million
limitation on executive compensation of named executive officers.
The affirmative vote of a majority of the shares of Common Stock of the
Company cast at the Meeting is necessary for approval of the Stock Incentive
Plan. The Board believes that the approval of the Stock Incentive Plan is in the
best interests of the Company and the stockholders because the Stock Incentive
Plan will enable the Company to provide competitive equity incentives to
officers and key salaried employees to enhance the profitability of the Company
and increase stockholder value. The Stock Incentive Plan further will serve to
align the interests of such persons and members of the Board of Directors with
the interests of stockholders by giving them a personal interest in the value of
the Company's Common Stock. THE BOARD OF DIRECTORS HAS APPROVED THE STOCK
INCENTIVE PLAN AND RECOMMENDS THAT THE COMPANY STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE STOCK INCENTIVE PLAN.
PROPOSAL THREE
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed Grant Thornton LLP to perform the
audit of the Company's financial statements for the year ending December 31,
2000, subject to ratification by the Company's stockholders at the Meeting.
Grant Thornton LLP served as the Company's Independent Auditors for the year
ended December 31, 1999. Representatives of Grant Thornton LLP will be present
at the Meeting. They will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions of
stockholders.
If the selection of Grant Thornton LLP is not ratified, or prior to the
next annual meeting of stockholders, such firm shall decline to act or otherwise
become incapable of acting, or if its engagement shall be otherwise discontinued
by the Board of Directors, the Board of Directors will appoint other independent
certified public accountants whose engagement for any period subsequent to the
next annual meeting will be subject to stockholder approval at such meeting. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE INDEPENDENT AUDITORS.
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OTHER MATTERS
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any stockholder intending to present a proposal at the 2001 Annual
Meeting in accordance with Rule 14a-8 under the Securities Exchange Act of 1934
for inclusion in the Company's proxy materials for such meeting must, in
addition to meeting other applicable requirements under the rules and
regulations of the Securities and Exchange Commission, submit such proposal to
Robert B. Morgan, Secretary, in writing no later than February 4, 2001.
MATTERS NOT DETERMINED AT TIME OF SOLICITATION
The Board of Directors does not know of any matters, other than those
referred to in the accompanying Notice for the Meeting, to be presented at the
meeting for action by the stockholders. However, if any other matters are
properly brought before the meeting or any adjournments thereof, it is intended
that votes will be cast with respect to such matters, pursuant to the proxies,
in accordance with the best judgment of the person acting under the proxies.
By Order of the Board of Directors
/s/ ROBERT B. MORGAN
-----------------------------------------
Robert B. Morgan, Secretary
Dated: June 5, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 1999 (THE "ANNUAL REPORT"), INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS
PROXY STATEMENT. THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING
MATERIAL OR AS COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
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APPENDIX A
800 TRAVEL SYSTEMS, INC.
STOCK INCENTIVE PLAN
I. PURPOSE.
The purpose of this 800 Travel Systems, Inc. Stock Incentive
Plan is to promote the growth and profitability of 800 Travel Systems, Inc. (the
"Corporation") by rewarding and incentivizing individuals who make valuable
contributions to the Corporation's success, including officers and employees of
the Corporation and its subsidiaries, and directors, consultants and advisors of
the Corporation.
The Stock Incentive Plan has been approved by the Board of
Directors effective as of March 27, 2000, and has been submitted for approval by
the Company's stockholders at the Annual Meeting of Stockholders scheduled in
2000.
II. DEFINITIONS.
The following terms shall have the meanings shown:
2.1 "Board of Directors" means the Board of Directors of the
Corporation.
2.2 "Change of Control" means any event described in Section 8.1.
2.3 "Code" means the Internal Revenue Code of 1986, as the same
may be amended from time to time.
2.4 "Committee" means the Committee appointed by the Board of
Directors pursuant to Article XI of the Plan. This Committee may, but is not
required to be, identical to the Compensation Committee.
2.5 "Common Stock" means the common stock, $.001 par value, of the
Corporation, except as provided in Section 9.2 of the Plan.
2.6 "Compensation Committee" shall mean the Compensation Committee
of the Board of Directors. All persons appointed to be members of the
Compensation Committee shall be directors who qualify as "Non-Employee
Directors" within the meaning of Rule 16b-3 and "outside directors" within the
meaning of Treasury Regulation Section 1.162-27.
2.7 "Date of Grant" means the date specified by the Plan
Administrator on which a grant of Options, SARs or a grant or sale of Restricted
Shares shall become effective.
2.8 "Director" means a member of the Board of Directors.
2.9 "Disability" shall mean a medically diagnosable mental or
physical condition which prevents a Participant from performing his or her
duties for the Company and is expected to be permanent.
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2.10 "Executive Officer" means any Named Executive Officer and any
other officer of the Corporation who is subject to the reporting requirements of
Section 16 of the Securities and Exchange Act of 1934.
2.11 "Fair Market Value" means the fair market value of a share of
Common Stock as determined by the Committee by reference to the closing price
quotation, or, if none, the average of the bid and asked prices, reported on
Nasdaq as of the most recent available date with respect to the sale of Common
Stock.
2.12 "Incentive Stock Options" means Options intended to qualify
for favorable tax treatment as incentive stock options under Code Section 422.
2.13 "Named Executive Officer" shall mean the Company's Chief
Executive Officer and the four highest compensated officers (other than the
Chief Executive Officer), as determined pursuant to the executive compensation
disclosure rules under the Securities Exchange Act of 1934.
2.14 "Option Agreement" means a written agreement between the
Corporation and a Participant who has been granted Options under this Plan. Each
Option Agreement shall be subject to the terms and conditions of the Plan.
2.15 "Option Price" means, with respect to any Option (or related
SAR), the amount designated in a Participant's Option Agreement as the price per
share he or she will be required to pay to exercise the Option and acquire the
shares subject to such Option.
2.16 "Options" means any rights to purchase shares of Common Stock
granted pursuant to Article IV of this Plan, including Incentive Stock Options
subject to the additional requirements described in Article V.
2.17 "Participant" shall mean any current or former employee of the
Corporation or any Subsidiary, or any Consultant or Director, who has been
granted Options, SARs or Restricted Stock under the terms of this Plan.
2.18 "Plan" means this 800 Travel International, Inc. Stock
Incentive Plan, as the same may be amended from time to time.
2.19 "Reload Option Rights" means the right to have additional
Options automatically granted to the Participant upon the exercise of his or her
Options, as granted pursuant to Section 4.5 of this Plan.
2.20 "Restricted Stock Agreement" means a written agreement between
the Corporation and a Participant who has been granted or sold Restricted Stock
pursuant to Article VII of the Plan.
2.21 "SARs" shall mean stock appreciation rights granted pursuant
to Article VI of the Plan.
2.22 "Subsidiary" shall mean any corporation which, on the date of
determination, qualifies as a subsidiary corporation of the Corporation under
Section 425(f) of the Code.
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III. ELIGIBILITY.
3.1 PARTICIPATION. The Committee may grant Options, SARs
and/or awards of Restricted Stock under this Plan to any officer, employee or
Consultant of the Corporation or any Subsidiary. The Committee may also grant
Options and/or awards of Restricted Stock to any Director, subject to the
restrictions in Section 3.3. In granting such awards and determining their form
and amount, the Committee shall give consideration to the functions and
responsibilities of the individual, his or her potential contributions to
profitability and sound growth of the Corporation and such other factors as the
Committee may, in its discretion, deem relevant.
3.2 EXECUTIVE OFFICERS. Notwithstanding Section 3.1 or any
other provisions of this Plan, any Named Executive Officer shall not be granted
Options, SARs or awards of Restricted Stock unless the grant has been approved
by the Compensation Committee, and all grants to Executive Officers must be
approved in advance by either the Committee or the Compensation Committee.
3.3 DIRECTORS. Members of the Board of Directors who are
officers of the Corporation or Consultants shall be eligible for Options or
other awards under this Plan on the same terms as other officers or Consultants.
Other members of the Board of Directors shall be eligible for Options or
Restricted Stock awards only to the extent specified in such general policy on
compensation of nonemployee Directors as may be established by the Board of
Directors.
IV. OPTIONS.
4.1 TERMS AND CONDITIONS. Subject to Section 3.2 and 3.3, the
Committee may, in its sole discretion, from time to time grant Options to any
officer, employee, Director or Consultant of the Corporation or any Subsidiary
selected by the Committee pursuant to Section 3.1. The grant of an Option to a
Participant shall be evidenced by a written Option Agreement in substantially
the form approved by the Committee. Such Option shall be subject to the
following express terms and conditions and to such other terms and conditions,
not inconsistent with the terms of this Plan, as the Committee may determine to
be appropriate.
(a) SHARES COVERED. The Committee shall, in its
discretion, determine the number of shares of Common Stock to be covered by the
Options granted to any Participant. The maximum number of shares of Common Stock
with respect to which Options may be granted to any Participant during any one
calendar year is 100,000 shares.
(b) EXERCISE PERIOD. The term of each Option shall be for
such period as the Committee shall determine, but for not more than ten years
from the Date of Grant thereof. The Committee shall also have the discretion to
determine when each Option granted hereunder shall become exercisable, and to
prescribe any vesting schedule limiting the exercisability of such Options as it
may deem appropriate.
(c) OPTION PRICE. The Option Price payable for the shares
of Common Stock covered by any Option shall be determined by the Committee, but
shall in no event be less than the Fair Market Value of Common Stock on the Date
of Grant.
(d) EXERCISE OF OPTIONS. A Participant may exercise his or
her Options from time to time by written notice to the Corporation of his or her
intent to exercise the Options with respect to a specified number of shares. The
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<PAGE> 23
specified number of shares will be issued and transferred to the Participant
upon receipt by the Corporation of (i) such notice and (ii) payment in full for
such shares, and (iii) receipt of any payments required to satisfy the
Corporation's tax withholding obligations pursuant to Section 8.3.
(e) PAYMENT OF OPTION PRICE UPON EXERCISE. Each Option
Agreement shall provide that the Option Price for the shares with respect to
which an Option is exercised may be paid to the Corporation at the time of
exercise, in the form of cash.
(f) BROKER ASSISTED EXERCISES. Alternatively, the
Corporation may permit the Participant to exercise an Option by delivery of a
signed, irrevocable notice of exercise, accompanied by payment in full of the
Option Price by the Participant's stockbroker and an irrevocable instruction to
the Corporation to deliver the shares of Common Stock issuable upon exercise of
the Option promptly to the Participant's stockbroker for the Participant's
account, provided that at the time of such exercise, such exercise would not be
illegal under the federal securities laws, including laws governing margin
loans.
4.2 EFFECT OF TERMINATION.
(a) If a Participant ends his employment or other
relationship with the Corporation (or with the relevant Subsidiary) for any
reason other than retirement, disability or death, his or her Options shall
terminate immediately upon the date of the termination, unless the Committee
decides in its sole discretion, to waive this termination and amends the
Participant's Option Agreement to provide for an extended exercise period.
(b) Any Option Agreement may, in the Committee's sole
discretion, include such provisions as the Committee deems advisable with
respect to the Participant's right to exercise the Option subsequent to
retirement or other voluntary termination of employment (or other relationship
with the Corporation), or subsequent to termination of such employment (or other
relationship) by reason of total and permanent disability; PROVIDED, that, in no
event shall any Option be exercisable after the fixed termination date set forth
in the Participant's Option Agreement pursuant to Section 4.1(b).
(c) Any Option Agreement may, in the Committee's sole
discretion, provide that, in the event of the Participant's death while he or
she has the right to exercise his or her Options, the Options may be exercised
(to the extent they had become exercisable prior to the time of the
Participant's death), during such period of up to one year after date of the
Participant's death as the Committee deems to be appropriate, by the personal
representative of the Participant's estate, or by the person or persons to whom
the Options shall have been transferred by will or by the laws of descent and
distribution.
4.3 INCENTIVE STOCK OPTIONS. The Options granted under this
Plan may be either Incentive Stock Options or options not intended to constitute
incentive stock options qualifying under Code Section 422; PROVIDED THAT,
Incentive Stock Options may only be granted to common employees of the
Corporation or its Subsidiaries; and FURTHER PROVIDED, any Incentive Stock
Option shall be subject to the additional requirements stated in Article V of
this Plan.
4.4 AUTHORITY TO WAIVE RESTRICTIONS ON EXERCISABILITY. The
Committee may, in its sole discretion, determine at any time that all or any
portion of the Options granted to a Participant under the Plan shall,
notwithstanding any restrictions on exercisability imposed pursuant to Section
4.1(b), become immediately exercisable in full. The Committee may make such
further adjustments to the terms of such Options as it may deem necessary or
appropriate in connection therewith.
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4.5 NON-ASSIGNABILITY. Options granted under this Plan shall
generally not be assignable or transferable by the Participant, except by will
or by the laws of descent and distribution, or as described in the next
paragraph.
Notwithstanding the foregoing, the Committee may, in its
discretion, permit a Participant to transfer all or a portion of his or her
Options to members of his or her immediate family, to trusts for the benefit of
members of his immediate family, or to family partnerships in which immediate
family members are the only partners, provided that the Participant may receive
no consideration for such transfers, and that such Options shall still be
subject to termination in accordance with Section 4.2 above in the hands of the
transferee.
4.6 RELOAD OPTIONS. The Committee may, in its discretion, also
grant a Participant Reload Option Rights with respect to his or her Options. If
a Participant who has been granted Reload Option Rights with respect to Options,
exercises his or her Options by paying the Option Price by delivering previously
owned shares of Common Stock, as authorized under Section 4.1(e) above, the
Participant shall automatically be granted additional Options on the same terms
for the number of shares delivered to pay such Option Price; provided, however,
that the term of any Reload Option shall not extend beyond the term of the
Option originally exercised.
4.7 COVENANTS NOT TO COMPETE. The Committee may, in its
discretion, condition any Option granted to an Employee, Consultant or Director
on such Participants agreement to enter into such covenant not to compete with
the Corporation as the Committee may deem to be desirable. Such covenant not to
compete shall be set forth in the Participant's Stock Option Agreement, and the
Stock Option Agreement shall provide that the Option shall be forfeited
immediately, whether otherwise vested or not, if the Board of Directors
determines that the Participant has violated his or her covenant not to compete.
In addition, in the Committee's discretion, the Participant's Stock Option
Agreement may also provide that if the Participant breaches his or her covenant
not to compete, the Corporation shall have the right to repurchase any shares of
Common Stock previously issues to the Participant pursuant to an exercise of the
Option, at a repurchase price equal to the Option Price paid by the Participant.
V. INCENTIVE STOCK OPTIONS.
The Committee may, in its discretion, specify that any Options
granted to a Participant who is an employee of the Corporation or a Subsidiary
shall be ISOs qualifying under Code Section 422.
5.1 Each Stock Option Agreement which provides for the grant
of ISOs shall expressly state that such Options are intended to qualify as ISOs.
Each provision of the Plan and of each Stock Option Agreement relating to an
Option designated as an ISO shall be construed so that such Option qualifies as
an ISO, and any provision that cannot be so construed shall be disregarded.
5.2 Any Options granted under this Plan which are designated
as ISOs shall comply with the following additional requirements:
(a) The aggregate Fair Market Value (determined at the
time an ISO is granted) of the shares of Common Stock (together with all other
stock of the Corporation and all stock of any Parent or Subsidiary) with respect
to which the ISOs may first become exercisable by an individual Participant
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during any calendar year, under all stock option plans of the Corporation (or
any Parent or Subsidiaries) shall not exceed $100,000. To the extent this
limitation would otherwise be exceeded, the Option shall be deemed to consist of
an ISO for the maximum number of shares which may be covered by ISOs pursuant to
the preceding sentence, and a nonstatutory option for the remaining shares
subject to the Option.
(b) The Option Price payable upon the exercise of an ISO
shall not be less than the Fair Market Value of a share of Common Stock on the
Date of Grant.
(c) In the case of an ISO granted to a Participant who is
a ten percent shareholder of the Corporation, the period of the Option shall not
exceed five years from the Date of Grant, and the Option Price shall not be less
than 110 percent of the Fair Market Value of Common Stock on the Date of Grant.
(d) No ISO granted under this Plan shall be assignable or
transferable by the Participant, except by will or by the laws of descent and
distribution. During the life of the Participant, any ISO shall be exercisable
only by the Participant.
VI. STOCK APPRECIATION RIGHTS.
6.1 GRANT OF SARS. The Committee may, in its discretion, from
time to time grant stock appreciation rights to a Participant in connection with
Options granted under this Plan. Participants granted SARs shall be entitled to
receive upon exercise thereof, in cash or Common Stock as provided in Paragraph
6.3(c), the difference between the Fair Market Value of the Common Stock on the
day preceding the exercise date and the Option Price of the underlying Option.
SARs may be granted with respect to all or part of the Common Stock under a
particular Option, except as otherwise expressly provided herein.
6.2 TANDEM OPTIONS. SARs shall entitle the Participant holding
the related Option, upon exercise, in whole or in part, of the SARs, to receive
payment in the amount and form determined pursuant to Paragraph 6.3(c). SARs may
be exercised only to the extent that the related Option has not been exercised.
The exercise of SARs shall result in a pro rata surrender of the related Option
to the extent that the SARs have been exercised.
6.3 TERMS AND CONDITIONS. The grant of SARs shall be evidenced
by including provisions with respect to such SARs in the Participant's Option
Agreement in a form approved by the Committee. Such SARs shall be subject to the
following express terms and conditions and to such other terms and conditions,
not inconsistent with the terms of the Plan, which the Committee may deem
appropriate.
(a) SARs shall be exercisable at such time or times and to
the extent, but only to the extent, that the Option to which they relate shall
be exercisable.
(b) SARs (and any Option related thereto) shall in no
event be exercisable during the first six months after the date of grant and
such rights shall not be transferable other than by will or by the laws of
descent and distribution and shall be exercisable during the Participant's
lifetime only by the Participant.
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(c) Upon exercise of SARs, the Participant shall be
entitled to receive an amount equal in value to the difference between the
Option Price and the Fair Market Value per share of Common Stock on the day
preceding the exercise date, multiplied by the number of shares in respect of
which the SARs shall have been exercised. Such amount shall be paid in the form
of (i) cash, (ii) shares of Common Stock with a Fair Market Value on the day
preceding the exercise date equal to such amount or (iii) a combination of cash
and shares of Common Stock, all as determined by the Committee.
(d) In no event shall an SAR be exercisable at a time when
the Option Price of the underlying Option is greater than the Fair Market Value
of the shares subject to the related Option.
VII. RESTRICTED STOCK.
7.1 RIGHTS AS A SHAREHOLDER. The Committee may, in its
discretion, grant a Participant an award consisting of shares of Restricted
Stock. At the time of the award, the Committee shall cause the Corporation to
deliver to the Participant, or to a custodian or an escrow agent designated by
the Committee, a certificate or certificates for such shares of Restricted
Stock, registered in the name of the Participant. The Participant shall have all
the rights of a stockholder with respect to such Restricted Stock, subject to
the terms and conditions, including forfeiture or resale to such Corporation, if
any, as the Committee may determine to be desirable pursuant to Section 7.3 of
the Plan. The Committee may designate the Corporation or one or more of its
executive officers to act as custodian or escrow agent for the certificates.
7.2 AWARDS AND CERTIFICATES.
(a) A Participant granted an award of Restricted Stock
shall not be deemed to have become a stockholder of the Corporation, or to have
any rights with respect to such shares of Restricted Stock, until and unless
such Participant shall have executed a restricted stock agreement or other
instrument evidencing the award and delivered a fully executed copy thereof to
the Corporation and otherwise complied with the then applicable terms and
conditions of such award.
(b) When a Participant is granted shares of Restricted
Stock, the Corporation shall issue a stock certificate or certificates in
respect of shares of Restricted Stock. Such certificates shall be registered in
the name of the Participant, and shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such award substantially in
the following form:
"The transferability of the shares of stock
represented by this Certificate are subject to the terms and
conditions (including forfeiture) of a Restricted Stock
Agreement entered into between the registered owner and 800
Travel International, Inc. A copy of such Agreement is on file
in the offices of the Secretary of the Company, 3165 McMullen
Booth Road, Building #5, Clearwater, Florida 33761.
(c) Except as may be otherwise determined by the Committee
(or as required in order to satisfy the tax withholding obligations imposed
under Section 11.3 of this Plan), Participants granted awards of Restricted
Stock under this Plan will not be required to make any payment or provide
consideration to the Corporation other than the rendering of services.
7.3 RESTRICTIONS AND FORFEITURES. Restricted Stock awarded to
a Participant pursuant to this Article VII shall be subject to the following
restrictions and conditions:
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(a) During a period set by the Committee of not less than
six (6) months, but not more than eight (8) years, commencing with the date of
an award (the "Restriction Period"), the Participant will not be permitted to
sell, transfer, pledge or assign shares of Restricted Stock awarded to him or
her. Within these limits, the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate.
(b) Except as provided in Section 7.3(a), the Participant
shall have with respect to the Restricted Stock all of the rights of a
stockholder of the Corporation, including the right to vote the shares and
receive dividends and other distributions.
(c) Subject to the provisions of Section 7.3(d), upon any
termination of the Participant's employment or other relationship with the
Corporation during the Restriction Period for any reason, all shares of
Restricted Stock with respect to which the restrictions have not yet expired
shall be forfeited to the Corporation, or, in the case of shares of Restricted
Stock sold to the Participant, repurchased by the Corporation at the initial
purchase price.
(d) In the event of a Participant's retirement from his or
her employment (or other relationship) with the Corporation, total Disability,
or death, or in cases of special circumstances, the Committee may, in its sole
discretion, when it finds that a waiver would be in the best interests of the
Corporation, waive in whole or in part any or all remaining restrictions with
respect to such Participant's Restricted Stock.
(e) Notwithstanding the other provisions of this Section
7.3, the Committee may adopt rules which would permit a gift by a Participant of
shares of Restricted Stock to a spouse, child, stepchild, grandchild or to a
trust the beneficiary or beneficiaries of which shall be either such a person or
persons or the Participant, provided that the Restricted Stock so transferred
shall be similarly restricted.
(f) Any attempt to dispose of shares of Restricted Stock
in a manner contrary to the restrictions set forth herein shall be ineffective.
(g) Nothing in this Section 7.3 shall preclude a
Participant from exchanging any Restricted Stock for any other shares of the
Common Stock that are similarly restricted.
VIII. CHANGE IN CONTROL TRANSACTIONS.
8.1 CHANGE IN CONTROL. For purposes of this Plan, a
"Change in Control" shall include any of the events described below:
(a) The acquisition in one or more transactions of more
than thirty percent of the Corporation's outstanding Common Stock, or the
equivalent in voting power of any classes or classes of securities of the
Corporation entitled to vote in elections of directors by any corporation, or
other person or group (within the meaning of Section 14(d)(3) of the Securities
Exchange Act of 1934, as amended);
(b) Any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving entity,
or any transfer or sale of substantially all of the assets of the Corporation or
any merger or consolidation of the Corporation into or with another corporation
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in which the Corporation is the surviving entity and, in connection with such
merger or consolidation, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for other stock or securities of the
Corporation or any other person, or cash, or any other property.
(c) Any election of persons to the Board of Directors
which causes a majority of the Board of Directors to consist of persons other
than (i) persons who were members of the Board of Directors on March 27, 2000,
and (ii) persons who were nominated for election as members of the Board by the
Board of Directors (or by a Committee of the Board) at a time when the majority
of the Board (or of such Committee) consisted of persons who were members of the
Board of Directors on March 27, 2000; PROVIDED, that any person nominated for
election by the Board of Directors composed entirely of persons described in (i)
or (ii), or of persons who were themselves nominated by such Board, shall for
this purpose be deemed to have been nominated by a Board composed of persons
described in (i).
(d) Any person, or group of persons, announces a tender
offer for at least thirty percent (30%) of the Corporation's Common Stock.
8.2 EFFECT OF CHANGE IN CONTROL. In the event of a pending or
threatened Change in Control, the Committee may, in its sole discretion, take
any one or more of the following actions with respect to all Participants:
(i) Accelerate the exercise dates of any outstanding
Options, and make all outstanding Options fully vested and exercisable;
(ii) Waive all or any portion of the vesting requirements
or other conditions associated with a Restricted Stock Award;
(iii) Grant Stock Appreciation Rights to the holders of
outstanding Options;
(iv) Pay cash to any or all Option holders in exchange for
the cancellation of their outstanding Options;
(v) Make any other adjustments or amendments to the Plan
and outstanding Options, or Restricted Stock Awards and/or substitute
new Options or other awards.
IX. AGGREGATE LIMITATION ON SHARES OF COMMON STOCK.
9.1 NUMBER OF SHARES OF COMMON STOCK.
(a) Shares of Common Stock which may be issued to
Participants pursuant to Options, SARs, or Restricted Stock awards granted under
the Plan may be either authorized and unissued shares of Common Stock or of
Common Stock held by the Corporation as treasury stock.
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(b) The number of shares of Common Stock reserved for
issuance under this Plan on the date of any grant shall not exceed 500,000
shares of Common Stock, subject to such adjustments as may be made pursuant to
Section 9.2.
(c) For purposes of Section 9.1(b), upon the exercise of
an Option or SAR, the number of shares of Common Stock available for future
issuance under the Plan shall be reduced by the number of shares actually issued
to the Participant, exclusive of any shares surrendered to the Corporation as
payment of the Option price.
(d) Any shares of Common Stock subject to an Option which
for any reason is cancelled, terminates unexercised or expires, except by reason
of the exercise of a related SAR, shall again be available for issuance under
the Plan.
(e) In the event that any award of Restricted Stock is
forfeited, cancelled or surrendered for any reason, the shares of Common Stock
constituting such Restricted Stock award shall again be available for issuance
under the Plan.
9.2 ADJUSTMENTS OF STOCK. In the event of any change or
changes in the outstanding Common Stock of the Corporation by reason of any
stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or any similar transaction, the number of shares of Common
Stock which may be issued under this Plan, the number of shares of Common Stock
subject to Options theretofore granted under this Plan, the Option Price of such
Options, the number of SARs theretofore granted in conjunction with an Option,
the number of shares of Restricted Stock shall each be adjusted in such manner
as the Board of Directors deems appropriate to prevent substantial dilution or
enlargement of the rights granted to a Participant.
New option rights may be substituted for the Options
granted under the Plan, or the Corporation's duties as to Options and SARs
outstanding under the Plan may be assumed by a Subsidiary, by another
corporation or by a parent or subsidiary (within the meaning of Section 425 of
the Code) of such other corporation, in connection with any merger,
consolidation, acquisition, separation, reorganization, liquidation or like
occurrence in which the Corporation is involved. In the event of such
substitution or assumption, the term Common Stock shall thereafter include the
stock of the corporation granting such new option rights or assuming the
Corporation's duties as to such Options or SARs.
X. MISCELLANEOUS.
10.1 GENERAL RESTRICTION. Any Option, SAR, or Restricted Stock
award granted under this Plan shall be subject to the requirement that, if at
any time the Committee shall determine that any registration of the shares of
Common Stock, or any consent or approval of any governmental body, or any other
agreement or consent, is necessary as a condition of the granting of an Option
or other award, or the issuance of Common Stock in satisfaction thereof, such
Common Stock will not be issued or delivered until such requirement is satisfied
in a manner acceptable to the Committee.
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10.2 WITHHOLDING TAXES.
(a) If the Corporation determines that the Corporation has
any tax withholding obligation with respect to a Participant, the Corporation
shall have the right to require that Participant to remit to the Corporation an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any shares of Common Stock under the Plan.
(b) The Corporation shall have the right to withhold from
payments made in cash to a Participant under the terms of the Plan, an amount
sufficient to satisfy any federal, state and local withholding tax requirements
imposed with respect to such cash payments.
(c) Amounts to which the Corporation is entitled pursuant
to Section 10.2(a) or (b), may be paid, at the election of the Participant and
with the approval of the Committee, either (i) paid in cash, (ii) withheld from
any compensation payable to the Participant by the Corporation, including cash
payments made under this Plan, or (iii) in shares of Common Stock otherwise
issuable to the Participant upon exercise of an Option or SAR, that have a Fair
Market Value on the date on which the amount of tax to be withheld is determined
(the "Tax Date") not less than the minimum amount of tax the Corporation is
required to withhold. A Participant's election to have shares of Common Stock
withheld that are otherwise issuable shall be in writing, shall be irrevocable
upon approval by the Committee, and shall be delivered to the Corporation prior
to the Tax Date with respect to the exercise of an Option or SAR.
10.3 INVESTMENT REPRESENTATION. If the Committee determines
that a written representation is necessary in order to secure an exemption from
registration under the Securities Act of 1933, the Committee may demand that the
Participant deliver to the Corporation at the time of any exercise of any Option
or SAR, or at time of the transfer of shares of Restricted Stock, any written
representation that Committee determines to be necessary or appropriate for such
purpose, including but not limited to a representation that the shares to be
issued are to be acquired for investment and not for resale or with a view to
the distribution thereof. If the Committee makes such a demand, delivery of a
written representation satisfactory to the Committee shall be a condition
precedent to the right of the Participant to acquire such shares of Common
Stock.
10.4 NON-UNIFORM DETERMINATIONS. The Committee's
determinations under this Plan (including without limitation its determinations
of the persons to receive Options, SARs, or awards of Restricted Stock, the
form, amount and timing of such awards and the terms and provisions of such
awards) need not be uniform and may be made by it selectively among Participants
who receive, or are eligible to receive, awards under this Plan, whether or not
such Participants are similarly situated.
10.5 NO RIGHTS AS SHAREHOLDERS. Participants granted Options
or SARs under this Plan shall have no rights as shareholders of the Corporation
as applicable with respect thereto unless and until certificates for shares of
Common Stock are issued to them.
10.6 TRANSFER RESTRICTIONS. The Committee may determine that
any Common Stock to be issued by the Corporation upon the exercise of Options or
SARs shall be subject to such further restrictions upon transfer as the
Committee determines to be appropriate.
XI. ADMINISTRATION OF THE PLAN.
11.1 COMMITTEE.
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(a) The Plan shall be administered on a day to day basis
by the Board of Directors or, if the Board determines it is desirable to
delegate its authority to administer the Plan, by a Committee appointed by the
Board of Directors. The Plan Committee appointed by the Board may be the
Compensation Committee of the Board of Directors or one or more directors or
executive or officers of the Corporation serving under the supervision of such
Compensation Committee, and, except as expressly stated otherwise in this Plan
with respect to Executive Officers, need not be composed of directors or
directors who qualify as "disinterested" within the meaning of SEC Rule 16b-3.
The Plan Committee shall serve at the pleasure of the Board of Directors.
(b) If the Committee is not the Board of Directors, the
Committee shall be monitored and supervised by the Compensation Committee of the
Board of Directors with respect to any actions related to Named Executive
Officers. All grants of Options, SARs or Restricted Stock to Executive Officers
shall be approved in advance by the Compensation Committee.
(c) The Committee shall have the authority, in its
discretion but subject to Sections 3.2 and 3.3 of this Plan, and subject to the
overall supervision of the Compensation Committee or the Board, from time to
time: (i) to grant Options, SARs, or shares of Restricted Stock to eligible
employees, Directors and Consultants, as provided for in this Plan; (ii) to
prescribe such limitations, restrictions and conditions upon any such awards as
the Committee shall deem appropriate; or (iii) to determine the periods during
which Options may be exercised and to accelerate the exercisability of
outstanding Options or SARs, or the vesting of Restricted Stock, as it may deem
appropriate;
(d) The Committee shall have the authority, in its
discretion, from time to time, to: (i) modify, cancel, or replace any prior
Options or other awards and to amend the relevant Option Agreements or
Restricted Stock Agreements with the consent of the affected Participants,
including amending such agreements to amend vesting schedules, extend exercise
periods or increase or decrease the Option Price for Options, as it may deem to
be necessary; and (ii) to interpret the Plan, to adopt, amend and rescind rules
and regulations relating to the Plan, and to make all other determinations and
to take all other action necessary or advisable for the implementation and
administration of the Plan. A majority of the Committee shall constitute a
quorum, and the action of a majority of members of the Committee present at any
meeting at which a quorum is present, or acts unanimously adopted in writing
without the holding of a meeting, shall be the acts of the Committee.
(e) All actions taken by the Committee shall be final,
conclusive and binding upon any eligible Participant. Neither the Committee nor
any members of the Committee shall be liable for any action taken or decision
made in good faith relating to the Plan or any award thereunder.
XII. AMENDMENT AND TERMINATION.
12.1 AMENDMENT OR TERMINATION OF THE PLAN. The Board of
Directors may at any time terminate this Plan or any part thereof and may from
time to time amend this Plan as it may deem advisable. The termination or
amendment of this Plan shall not, without the consent of the Participant, affect
any Participant's rights under an award previously granted.
12.2 TERM OF PLAN. Unless previously terminated pursuant to
Section 12.1, the Plan shall terminate on March 27, 2010, the tenth anniversary
of the date on which the Plan became effective, and no Options, SARs, or awards
of Restricted Stock may be granted on or after such date.
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APPENDIX B
800 TRAVEL SYSTEMS, INC.
4802 GUNN HIGHWAY
TAMPA, FLORIDA 33624
PROXY FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 10, 2000
The undersigned, having received notice of the Annual Meeting of 800 Travel
Systems, Inc. to be held at 9:00 a.m. (Eastern Standard Time), on Monday, July
10, 2000 (the "Meeting"), hereby designates and appoints Mark D. Mastrini and
Robert B. Morgan, and either of them with authority to act without the other, as
proxies for the undersigned, with full power of substitution and resubstitution,
to vote all of the shares of Common Stock which the undersigned is entitled to
vote at the Meeting and at any adjournment thereof, such proxies being directed
to vote as specified on the reverse side.
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the Meeting or any adjournment thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF 800 TRAVEL SYSTEMS,
INC. AND WILL BE VOTED AS SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE NAMED
PROXIES WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3 AND IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF, PROVIDED THAT THIS
PROXY WILL NOT BE VOTED TO ELECT MORE THAN TWO DIRECTORS.
(Continued on the reverse side)
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<PAGE> 33
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING MATTERS. PLEASE
MARK AN "X" IN ONE SPACE. TO BE EFFECTIVE, THIS PROXY MUST BE DEPOSITED AT THE
COMPANY'S REGISTRARS NOT LATER THAN 48 HOURS BEFORE THE TIME APPOINTED FOR THE
MEETING. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
1. Proposal to elect the following two (2) nominees as Directors: L.
Douglas Bailey and Peter M. Sontag
FOR WITHHELD
[ ] [ ]
FOR, EXCEPT VOTE WITHHELD
FOR THE FOLLOWING NOMINEE(S):
-----------------------------------------------------------------
2. Proposal to approve the 2000 Stock Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to ratify Grant Thornton LLP as the Company's independent
auditors until the conclusion of the 2001 Annual Meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
Dated:______________________________________
Signature___________________________________
Signature if held jointly___________________
IMPORTANT: Please sign exactly as your name
appears on this proxy and mail promptly in
the enclosed envelope. If you sign as agent
or in any other capacity, please state the
capacity in which you sign.
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